Thyssenkrupp Steel sees $1.4 billion funding gap in planned divorce from parent

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FRANKFURT/DUESSELDORF, Aug 9 (Reuters) - Thyssenkrupp's steel division requires around 1.3 billion euros ($1.4 billion) in additional funds beyond what its parent is prepared to pay in a planned separation process, the division's supervisory board chairman said on Friday.

Sigmar Gabriel, who spoke after a supervisory board meeting of Thyssenkrupp Steel Europe (TKSE), said an external audit would now be carried out to determine the unit's restructuring and funding needs, adding that this could happen before year-end.

Gabriel added that the board would reconvene on Aug. 29 to continue its discussions and that Friday's meeting only marked one step towards separation of TKSE from Thyssenkrupp AG, an effort the parent has pursued for years.

The meeting was also attended by Czech billionaire Daniel Kretinsky, who last week closed a deal to buy 20% of TKSE and is in talks to buy a further 30% to eventually form a 50:50 steel joint venture with Thyssenkrupp.

Gabriel said there has been no agreement between the steel unit's management and the division's owners about how the funding gap could be closed, and if it even was that big, adding the planned external audit was meant to bring clarity.

"This will ... not be an official ruling that everyone will then have to abide by, but rather, if you like, a neutral assessment by auditors, on the basis of which we will hopefully come to an agreement," Gabriel said.

Gabriel said TKSE and Thyssenkrupp AG had agreed to strike an interim funding agreement for the next 24 months to ensure the steel division's operations beyond the end of September, which is when a domination agreement between both sides ends. ($1 = 0.9158 euro) (Reporting by Christoph Steitz and Tom Kaeckenhoff; editing by Emma-Victoria Farr and Jonathan Oatis)