Stuart Wilkie, managing director of Tata Steel’s strip products, is reportedly putting together a management buyout package that includes significant contribution from workers at Port Talbot and the British government.
No details of the package are available, but reports from Wales said the Community trade union welcomed discussions with Wilkie to buy the strips steel business that employs nearly 5,000 people.
The Tata board recently decided to sell all its assets in Britain after losses mounted to £1 million a day over the past year. The firm’s steel business in the UK is based around the Port Talbot works in Wales.
Wilkie had submitted a rescue plan for Port Talbot to the Tata board a month ago but it did not get the green signal since it required an order of investment that the board was unwilling to commit to, besides questions about the plan’s success.
Welsh Labour MP Stephen Kinnock said the management buyout plan is the “right way to go”, but industry circles cautioned that a post-Tata Steel scenario would need an overhaul in basics, including not retaining the blast furnaces.
Business secretary Sajid Javid told the House of Commons last week the government could look at the possibility of co-investing with a steel buyer “on commercial terms”. On its part, the government has appointed consultant EY for the purpose.
{{/usCountry}}Business secretary Sajid Javid told the House of Commons last week the government could look at the possibility of co-investing with a steel buyer “on commercial terms”. On its part, the government has appointed consultant EY for the purpose.
{{/usCountry}}He said: “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.”
One potential buyer for Tata Steel’s assets is Sanjeev Gupta’s Liberty Group.
Kath Ringwald, a senior lecturer at the University of South Wales, told BBC that there were “enormous difficulties ahead” but Wilkie’s buyout plan would be welcomed by everyone.
“It is a very different plan; for example the Liberty plan is talking about no redundancies,” she said.
“Whether or not this plan could succeed on the same basis we don’t know but it is a very difficult time in market conditions to be tabling an ambitious plan for re-investment.”
A Tata Steel statement on the buyout proposal said: “Tata Steel Europe welcomes credible expressions of interest for Tata Steel’s UK operations. It is our policy that we are not naming, confirming or commenting on any potentially interested investor or bidder at this point.
“All expressions of interest, including any management buyout proposals, will be considered when received. In the interests of all stakeholders every credible expressions of interest will enter the same rigorous assessment process to ensure the best value and prospects of sustainability.”