Tata Steel sells part of UK business to Greybull | business | Hindustan Times
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Tata Steel sells part of UK business to Greybull

business Updated: Apr 13, 2016 01:41 IST
Prasun Sonwalkar
Prasun Sonwalkar
Hindustan Times
Tata Steel

Tata Steel agreed to sell part of its British business to investment firm Greybull Capital on Monday, preventing thousands of job losses, and freeing it up to focus on the sale of its other big plant, in Wales.(Reuters Photo)

Tata Steel on Monday kickstarted the sale process for its UK assets with divestment of its 4.5-million-tonne long products Scunthorpe steel plant to UK-based investment firm Greybull Capital for a ‘nominal’ amount.

The company did not announce any sale figure, but said it is arranging a $569-million investment and financing package for the new business.

The British government could look at the possibility of co-investing with a steel buyer “on commercial terms”, business secretary Sajid Javid told the House of Commons.

“I’ve been in contact with potential buyers, making clear that the government stands ready to help. This includes looking at the possibility of co-investing with a buyer on commercial terms”.

Consultants EY had been appointed for the purpose.

Javid, who met Tata Sons chairman Cyrus Mistry in Mumbai last week regarding the sale of the company’s UK business said: “Today’s announcement (Scunthorpe deal) is a step in the right direction for the long-term future of British steel manufacturing in Scunthorpe.”

“We will look through the detail and stand ready to provide funding on a commercial basis if required. The UK and Welsh governments are working to ensure that we can now reach a deal for Port Talbot and the other Tata sites across the UK,” he added.

Scunthorpe unit of Tata Steel accounts for 15% of the company’s European capacity of 13.5 million tonnes (MT).

Tata Steel said Greybull Capital will take on the whole business, including assets and relevant liabilities, and secure an appropriate funding package. “The deal would be completed 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 employs 4,800 people — 4,400 in the UK and 400 in France.

“This sale is the best possible outcome for employees who have worked relentlessly to ensure the business’s survival, and helped to make it attractive to a potential buyer,” said Bimlendra Jha, executive chairman of the standalone long products Europe business.

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

“Under these current challenging market conditions in Europe and the soaring levels of imports from China, we are happy that Tata Steel UK and Greybull have entered the final stage of the sale of shareholding in Longs Steel UK,” said Hans Fischer, CEO of Tata Steel’s European operations.