UK unveils financial help for crisis-hit Tata Steel buyer
The British government Thursday offered "hundreds of millions of pounds" in financial support for potential buyers of crisis-hit Tata Steel's UK operations and said it could even buy up to a quarter of the company.
"A package of support worth hundreds of millions of pounds will be made available on commercial terms to potential buyers of Tata Steel UK," the Department for Business, Innovation & Skills said in a statement.
The announcement followed a second meeting between Business Secretary Sajid Javid and Tata Global chairman Cyrus Mistry this week in Mumbai, where the Indian steel giant is based.
Most of the financial support is expected to be through debt financing, according to the statement.
However it said other more complex forms of financing were also on the cards, including supporting any purchaser by taking a minority stake of "up to 25 percent" to help a sale.
Such a move, the government stressed, would not see it "acquire a material element of control over the business".
The British government was thrown into crisis late last month when Tata Steel unexpectedly put its British business up for sale, sparking calls for state intervention to safeguard 16,300 jobs.
It has been urged to renationalise the iconic industry that dates back to the 19th century and which once provided 40 percent of the world's supply, but such a move is prohibited by the European Union.
- Plunging prices -
Tata Steel signalled its exit from Britain on March 30, blaming global oversupply of steel, cheap imports into Europe, high costs and currency volatility.
"The UK government has been clear that since Tata announced its intention to divest its UK operations, it is ready to support a credible private buyer of Tata Steel UK, offering financing on commercial terms to support the ongoing operations and deliver long-term investment in the future of the business," the statement said Thursday.
The government is also working with Tata and the British Steel Pension Scheme's trustees to reduce the pensions burden on any future buyer, which could see the separation of the pensions liabilities from the main business.
Javid said in a statement that the government was "committed to supporting the steel industry to secure a long-term, viable future".
"The detail of our commercial funding offer is clear evidence of the extent of that commitment," he said.
"Ministers have visited Tata Steel sites across the country and the pride and dedication of the highly skilled men and women working there is obvious to see."
Thursday's announcement followed the start on April 11 of a formal sales process to offload Tata's loss-making British assets.
Tata has already sold its Long Products Europe (LPE) division -- whose chief asset is the Scunthorpe steelworks in eastern England -- to Greybull Capital, a British-based family investment firm. Long products are items such as steel pipes that are sold by length.
The company is still looking for a buyer for the rest of its assets including the Port Talbot works on the south Wales coast, Britain's biggest steel plant, which employs 4,000 workers.
Port Talbot is losing £1 million ($1.4 million, 1.26 million euros) a day in the face of high energy costs and plunging prices caused by a chronic global oversupply of steel and a glut of cheap imports, particularly from China.
© 2016 AFP