Steel sector jobs could be saved by government
The government is working with private equity fund Greybull on a deal to save 4,000 jobs at Tata’s Scunthorpe steelworks.
The department for business, innovation and skills (BIS) is negotiating with both Tata Steel and Greybull to finalise a deal ahead of a 31 March deadline that could see the government taking a stake in the plant. Plans could see the government pump a £100m taxpayer funded loan into the steelworks, according to reports.
If the deadline for the sale is missed the company’s UK long products division, which is mostly made up by the Lincolnshire steel plant, faces closure.
Turnaround fund Greybull, which announced it was in talks to save the steelworks in December last year, is assembling a package that’s expected to be around £400m.
The sensitive deal, that must be carefully worded to not breach rules on European state aid, includes debt, equity, and reinvested cost cuts.
Tata’s European boss, Karl Kohler, who stood down last month, has warned the UK business has no future as part of the Indian industrial conglomerate.
Secretive fund Greybull, based in London’s upmarket Knightsbridge, is run by former banker Nathaniel Meyohas and his brother Marc.
It was previously involved in the high profile rescue of ailing airline Monarch in 2014. The airline was returned to profit at the expense of 700 jobs, and a pay cut for remaining staff of up to 35 per cent. The firm also bought a stake in Morrisons’ M Local convenience store arm.
The steel industry has been engaged in talks with the European Union to increase the rates on imported steel, arguing the so called lesser duty rule is forcing them to compete with unfair pricing due to Chinese dumping.