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Released June 03, 2019 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.K.'s second-largest steelmaker, British Steel, has been ordered into liquidation after failing to secure emergency funding from the government.
The collapse jeopardises approximately 25,000 jobs--5,000 direct employees and 20,000 that rely on its supply chain--unless a new buyer can be found in the coming month. Most of the employees work at the company's Scunthorpe blast furnace and steel plant where the products span the construction, rail, specialist steel and wire rod sectors. Most of the products are exported to the European Union (EU) and Turkey. The collapse is a major blow to the U.K.'s already struggling steel sector.
"The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site," stated the Official Receiver. "I appreciate that this a difficult time for the company's employees and I want to thank them for their ongoing cooperation. The company in liquidation is continuing to trade and supply its customers while I consider options for the business. Staff have been paid and will continue to be employed."
British Steel was rescued by investment firm Greybull Capital in 2015 when it bought the firm for £1 ($1.30) and had approached the government recently for a bailout estimated at £75 million ($95 million).
U.K. Business Secretary Greg Clark explained the government's refusal decision: "The government can only act within the law, which requires any financial support to a steel company to be on a commercial basis. I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made."
He added: "The government has worked tirelessly with British Steel, its owner Greybull Capital, and lenders to explore all potential options to secure a solution for British Steel. We have shown our willingness to act, having already provided the company with a £120 million ($152 million) bridging facility to enable it to meet its emissions trading compliance costs. This will be a deeply worrying time for the thousands of dedicated British Steel workers, those in the supply chain and local communities. In the days and weeks ahead, I will be working with the Official Receiver and a British Steel support group of management, trade unions, companies in the supply chain and local communities, to pursue remorselessly every possible step to secure the future of the valuable operations in sites at Scunthorpe, Skinningrove and on Teesside."
The U.K. government recently gave the company an emergency loan of £120 million to cover its EU bill for carbon dioxide (CO2) emissions or the company could have faced a £600 million ($762 million) fine. Potential buyers of the firm include Liberty Steel, which bought Tata Steel Europe's specialty steel business in 2017 and recently received EU approval to acquire seven major European steel plants from ArcelorMittal S.A. (NYSE:MT) (Luxembourg).
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
The collapse jeopardises approximately 25,000 jobs--5,000 direct employees and 20,000 that rely on its supply chain--unless a new buyer can be found in the coming month. Most of the employees work at the company's Scunthorpe blast furnace and steel plant where the products span the construction, rail, specialist steel and wire rod sectors. Most of the products are exported to the European Union (EU) and Turkey. The collapse is a major blow to the U.K.'s already struggling steel sector.
"The immediate priority following my appointment as liquidator of British Steel is to continue safe operation of the site," stated the Official Receiver. "I appreciate that this a difficult time for the company's employees and I want to thank them for their ongoing cooperation. The company in liquidation is continuing to trade and supply its customers while I consider options for the business. Staff have been paid and will continue to be employed."
British Steel was rescued by investment firm Greybull Capital in 2015 when it bought the firm for £1 ($1.30) and had approached the government recently for a bailout estimated at £75 million ($95 million).
U.K. Business Secretary Greg Clark explained the government's refusal decision: "The government can only act within the law, which requires any financial support to a steel company to be on a commercial basis. I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made."
He added: "The government has worked tirelessly with British Steel, its owner Greybull Capital, and lenders to explore all potential options to secure a solution for British Steel. We have shown our willingness to act, having already provided the company with a £120 million ($152 million) bridging facility to enable it to meet its emissions trading compliance costs. This will be a deeply worrying time for the thousands of dedicated British Steel workers, those in the supply chain and local communities. In the days and weeks ahead, I will be working with the Official Receiver and a British Steel support group of management, trade unions, companies in the supply chain and local communities, to pursue remorselessly every possible step to secure the future of the valuable operations in sites at Scunthorpe, Skinningrove and on Teesside."
The U.K. government recently gave the company an emergency loan of £120 million to cover its EU bill for carbon dioxide (CO2) emissions or the company could have faced a £600 million ($762 million) fine. Potential buyers of the firm include Liberty Steel, which bought Tata Steel Europe's specialty steel business in 2017 and recently received EU approval to acquire seven major European steel plants from ArcelorMittal S.A. (NYSE:MT) (Luxembourg).
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
