Turkish Buyer Could Save British Steel

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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Talks are underway to save the U.K.'s second-largest steelmaker, British Steel (Scunthorpe, England), after it was ordered into liquidation in June after failing to secure emergency funding from the government.

British Steel, which employs around 5,000 people, could be saved if a deal can be struck with Turkey's Ataer Holdings, owned by the Turkish army retirement fund Oyak. Talks are at an advanced stage, with unofficial reports estimating that it will pay up to £70 million ($90.6 million) for the business and invest £900 million ($1.16 billion) going forward. Turkish media has reported that the deal could be sealed at the beginning of next month if it can secure attractive grants from the U.K. government and its British Steel Support Group.

U.K. Labour MP for Redcar, Anna Turley, told a TeessideLive news report: "The government and the Official Receiver continue to work at pace, and exclusive talks with Ataer are progressing well. Confidence for a successful agreement remains high and the intention is for this to be confirmed in November, subject to all approvals being reached."

She added: "There has been some media coverage suggesting that a Chinese company is trying to re-enter talks. Whilst the Official Receiver is in exclusivity with Ataer, the government continues to talk to anyone with interest. Ataer is speaking to all relevant parties and continuing close engagement with special managers EY and the government. They have also invited the trade unions to Turkey to visit other sites that Ataer has turned around. It is reassuring to see Ataer's credentials as long-term investors looking at a generational business and not just short-term return."

The collapse of British Steel in the summer jeopardised approximately 25,000 jobs--5,000 direct employees and 20,000 that relied on its supply chain--unless a new buyer could be found. 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 was a major blow to the U.K.'s struggling steel sector. For additional information, see June 3, 2019, article - British Steel Collapses After U.K. Government Refuses Bailout.

Paul McBean, chairman of British Steel's multi-union committee, was part of a delegation that visited Ataer in Turkey recently. "We have had the conference call with the government, and there has been a bit of a void while the Turkish company looks over the books and does its due diligence. But we have been assured that everything is still on track, they are still very interested and they still want us, so that has put a lot of people's minds at ease. There are still two or three companies following closely as they still want it, so there is a back-up, and it certainly lifts you a bit."

Other 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).

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