Yahoo Finance British Steel bid still on, insists Chinese firm Jingye
The Chinese firm poised to buy British Steel has denied the deal is in danger of collapse, amid concern that any further delay in the already lengthy sale process will make the business less attractive to alternative buyers.
Jingye, an industrial giant founded by a former Communist party official, agreed to buy British Steel in early November after an earlier round of talks with the pension fund of the Turkish military broke down.
A sale could save more than 4,000 jobs, most of them at the Scunthorpe steelworks, freeing the government of the £1m-a-day cost of keeping the business alive. Costs are thought to have exceeded £200m so far.
The deal has yet to be completed nearly seven months after British Steel collapsed into liquidation and more than a month after a sale was agreed in principle with Jingye. A setback would be an early challenge to the government, especially after this week Scunthorpe returned its first Conservative MP since 1983.
Reports at the weekend suggested that concern is mounting in Whitehall that Jingye’s bid could stall but the Chinese company said it still expects the transaction to go ahead as planned.
“Following the agreement signed on 10 November, Jingye group and the relevant authorities continue to make progress in securing the necessary approvals to complete the transaction and remain confident that these will be achieved in the New Year,” said a spokesperson. “Any suggestion to the contrary is completely incorrect.”
A Whitehall source played down the urgency of completing the sale, saying no hard deadline has been set, despite the cost of keeping the company running. Its operations are being funded by an indemnity from the government.
The Official Receiver said: “A sales agreement for the purchase of British Steel was signed in early November and the parties have been working together since then to complete the deal as soon as practicable.”
However, industry sources said any further delay could make it impossible to find an alternative buyer if Jingye’s interest evaporates.
The source said potential suitors would fear any “nasty surprises” that may have emerged under state ownership, such as regular customers abandoning the firm due to uncertainty over its future, or problems caused by a lack of investment.
Should Jingye walk away from a deal, the Official Receiver and accounting firm EY – the special adviser assisting in the sale – would be left with limited options.
Liberty House, the metals business owned by UK-based steel magnate Sanjeev Gupta, has long been interested in buying British Steel but has struggled to persuade the government of the wisdom of its plans.
Liberty wants to convert Scunthorpe into an electric arc furnace steelworks that makes steel from scrap metal rather than making it from scratch using blast furnaces in the production process. But this plan would likely result in a reduction in the site’s workforce, which would prove politically difficult for the Conservatives.
The town’s new Conservative MP, Holly Mumby-Croft, told the Guardian she was already working to secure the future of the steelworks.
“I was born in Scunthorpe and my family worked at the steelworks, I know how important the industry is to local workers and to our local economy,” she said.
“I have already started and intend to continue to work hard to support jobs in the steel industry and its supply chain locally.”
The constituency’s former MP, Labour’s Nic Dakin, said: “My number one priority during my time as Scunthorpe MP was to stand up for the steel industry and I’m very proud that British Steel continue to trade positively and that there was interest from new owners at the point I was no longer an MP.
“My hope for the future is that the steel industry will have the same sort of champion to look after its interests.”
