Singapore Markets close in 7 hrs 56 mins

British Steel workers hope jobs safe as buyer found in rescue deal

Tom Belger
Finance and policy reporter
The steelworks plant in Scunthorpe as owner British Steel is to go into official recievership after failing to secure funds for its future. Photo: Press Association

The first stages of a rescue deal have been agreed for British Steel, with the Turkish military’s pension fund in line to take over Britain’s second largest steelmaker.

Thousands of workers in Scunthorpe, Teesside, and other areas will hope the reported agreement could save their jobs, after the steel firm teetered on the brink of collapse.

Ben Houchen, mayor of Tees Valley, said it marked a “massive step forward,” adding that the news would be “a huge weight off the shoulders of local workers, their families and the supply chain.”

Ataer Holdings has made an “acceptable offer” for the whole firm and is now in exclusive takeover talks after being chosen as the preferred buyer, the UK government’s insolvency service said.

The insolvency service hopes to finalise the deal “in the coming weeks,” while Ataer, part of the Turkish fund Oyak, is expected to now carry out due diligence checks. Ataer owns part of major Turkish steel producer Erdemir.

READ MORE: Could the UK nationalise British Steel after its collapse?

Fears had been growing that a buyer would only take over part of the steel firm’s more profitable operations, threatening thousands of jobs in other parts of the business. The UK government had been pushing hard for a buyer to take over the whole firm.

The collapse of the company could have spelled disaster for Scunthorpe and its steel workers if no buyer had been found.

More than 4,000 workers are employed at the giant plant itself, with up to 20,000 more jobs reportedly dependent on it through the supply chain. The industry is central to the town’s heritage and identity.

“The overwhelming feeling of the 5,000 workers at British Steel is one of relief,” Unite national officer for steel Harish Patel said. “Since May the workers have had their lives put on hold with the future of the company and their jobs being placed in an extremely precarious position.

“In order to secure the long-term future of British Steel and the UK steel industry there remains a requirement for the government to keep its eye on the ball and provide assistance to tackle problems of high use energy costs and business rates.”

Workers leave the steelworks plant in Scunthorpe following a shift change as owner British Steel is to go into official recievership after failing to secure funds for its future. Photo: Press Association

The company was wound-up in May, but staff were kept on and the firm continued to trade in liquidation after the UK government provided funds to keep it running.

A fresh £300m government aid package is said by Sky News to have been agreed to support the steelmaker at a challenging time for the industry.

British Steel had been owned previously by investment firm Greybull Capital, which bought it for £1 in 2016 from Tata. They renamed the company after the historic British state company of the same name.

But the industry has been battling many headwinds, from Chinese competition and US President Donald Trump’s tariffs on EU steel to high energy bills and sterling’s plunging value.

READ MORE: 25,000 jobs at risk as British Steel battles for survival

Customers’ fears of further tariffs are believed to have damaged demand at the firm before it collapsed earlier this year.

Unions also warned earlier this year that the government’s plan to cut global import tariffs on steel to zero would “destroy” jobs in the event of a no-deal Brexit.

"Following discussions with a number of potential purchasers for the British Steel group over the past few weeks, I am pleased to say I have now received an acceptable offer from Ataer Holdings A.S. for the purchase of the whole business and I am now focusing on finalising the sale,” the UK government’s official receiver, which deals with companies in administration, said.

"I will be looking to conclude this process in the coming weeks, during which time British Steel continues to trade and supply its customers as normal. I would like to thank all employees, suppliers, and customers for their continued support which has been essential to get to this point.”

“Giving Ataer Holding preferred bidder status is a positive step and a whole business sale now seems likely to go ahead, which will be a relief for thousands of British Steel workers,” John Cullen, business recovery partner at Menzies accountancy firm, said.

“Ataer requiring more steel for its ‘downstream’ plants, means production in the UK could increase post-sale, which would be very good news for the domestic workforce. The sale could also open the door to more export opportunities in Europe.”