Tata Starts Search For Buyer For UK Steel Business

Tata Starts Search For Buyer For UK Steel Business

The search for a buyer for Tata Steel's loss-making UK business has started, with "many tens" of firms set to be contacted in the hope of saving thousands of jobs.

Executive group director Koushik Chatterjee said the aim was to sell the assets as a whole rather than splitting up the business.

He spoke after Tata announced the signing of an agreement to sell its Long Products business, including the giant Scunthorpe plant, to investment firm Greybull Capital.

The deal safeguards thousands of jobs and holds out fresh hope that the rest of the business can be saved.

The sale covers several UK-based assets including the Scunthorpe steelworks, two mills in Teesside, an engineering workshop in Workington, Cumbria, a design consultancy in York, and associated distribution facilities, as well as a mill in northern France.

The deal will be completed in around eight weeks' time, once a number of outstanding conditions have been resolved, including transfer of contracts, certain Government approvals and the satisfactory completion of financing arrangements.

The Long Products Europe business, which employs 4,800 people - 4,400 in the UK and 400 in France, will be renamed British Steel.

The Government and unions warmly welcomed the deal, which took nine months to complete.

Mr Chatterjee declined to give a timescale for the sale of the rest of the business, saying there would be different stages, starting with the launch of the official process today.

"Let the process start," he told a media briefing.

He confirmed that the UK business as a whole, including the huge plant at Port Talbot in south Wales, is losing £1 million a day, and for the last year has been making "significant" losses, adding that the steel industry is facing its biggest crisis possibly in 50 years.

It is understood that more than two firms have expressed an interest in Tata's plants, including Liberty House.

Advisers KPMG will start "reaching out" to many tens of potential buyers, said Mr Chatterjee, adding: "We will run this process in a credible manner but it is important we don't have a very long uncertain period for the employees, suppliers and customers."

Mr Chatterjee said the capital commitment needed in the short and long term was not something the Tata board could afford to support.

No price is being mentioned in the documents being sent to interested parties.

Mr Chatterjee said he would never describe the purchase by Tata in 2007 of the steel business from Corus as a mistake.

Union members at Scunthorpe are currently being balloted on whether to accept a 3% cut in pay and reductions in pension contributions for a year to smooth the path for the Greybull deal, with the result due next week.

Business Secretary Sajid Javid said: "Today's announcement is a step in the right direction for the long-term future of British steel manufacturing in Scunthorpe.

"This agreement wouldn't have been reached without the efforts of all those involved especially the high-skilled workforce and local management. We will continue to work with Tata and Greybull and, as we have said, stand ready to provide funding on a commercial basis if required.

"The UK and Welsh Governments are working tirelessly to support Tata Steel to reach a deal for Port Talbot and their other sites across the UK. This agreement sends positive signals to any potential investor for the rest of Tata's UK business."

Gareth Stace, director of UK Steel, said: "This is clearly good news for the British steel sector, and I hope it will provide a much-needed boost for steelmaking in the UK.

"However, while very welcome it does not mean that we are out of the woods yet. A long-term investor is needed, in the very short term, for the remainder of the whole of the Tata Steel UK business, including Port Talbot."

Close

What's Hot