FRANKFURT (Reuters) -Warship maker TKMS has renegotiated terms of project guarantees it gets from parent Thyssenkrupp, according to a prospectus ahead of TKMS' separate listing, indicating tougher conditions as the business prepares for a stand-alone future.

Thyssenkrupp will spin off 49% of TKMS on October 20, the prospectus published late on Monday said, the latest move in the German conglomerate's ongoing restructuring efforts that highlight the growing value of defence assets.

Thyssenkrupp, an engineering and steel production group, has issued so-called parent company guarantees worth around 10 billion euros ($11.56 billion) to TKMS, which are key in safeguarding the division's orders.

So far, Thyssenkrupp had charged a fixed annual fee of 85,000 euros per guarantee provided to TKMS, resulting in fairly stable annual costs for TKMS between 13.3 million euros and 15.3 million euros in 2022-2024, the prospectus said.

The spin-off and listing are seen as key steps in Thyssenkrupp's strategy to unlock shareholder value while providing TKMS access to capital markets.

TKMS HAS SECURED 2.5 BILLION EUROS IN BANK GUARANTEES

"In connection with the spin-off, the terms for existing PCGs have been re-negotiated, resulting in fixed annual fees, payable by us to Thyssenkrupp AG that are expected to escalate year-over-year," the TKMS spin-off prospectus said.

The renegotiated terms kick in with the 2025 year beginning in October. It wasn't immediately clear how many projects were covered by the guarantees.

TKMS intends to avoid drawing on further such guarantees going forward, and will instead seek other arrangements with clients and banks.

TKMS said it had secured commitments for about 2.5 billion euros in bank guarantees, expected to cover its needs in the year through September 2027.

Brokerage Jefferies reckons TKMS shares could trade at around 36.55 euros apiece based on a 2.3 billion euro valuation.

($1 = 0.8652 euros)