Tata Steel has agreed the sale of its UK long products business to investment group, Greybull Capital, for £1 in a deal that aims to revive the British Steel brand and hopefully save 4,400 jobs.
The deal will keep open a steelworks in Scunthorpe, 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.
Tata has been in talks with Greybull since late 2015 on the sale of its long products business.
Crucially, the agreement does not include the Port Talbot steelworks or the rest of Tata’s UK business, which employs around 15,000 staff, for which it is seeking a buyer after putting it up for sale last month.
The firm will be renamed British Steel, a brand which disappeared in 1999 with the creation of Corus, which was later bought by Tata.
Greybull will only pay a nominal fee for Tata’s Long Products Europe (LPE) division because it has agreed to take on the firm’s liabilities and put together a £400million funding package to keep the business going. A loan from the government on commercial terms could form part of this funding package.
Founded by former Lehman Brothers investment banker Nathaniel Meyohas, Greybull has previously invested in charter airline Monarch and high street electricals retailer Comet.
BJ Chong, a partner and head of Palmers Commercial and Company Law team, said: “Whilst the news for steelworkers in the North is largely good, the clock is ticking for Tata Steel. It is losing millions a week and investment deals can involve lengthy discussions; after all the deal with Greybull took six months to conclude.
“There have been suggestions of tentative interest from the steel company Liberty House but, according to reports, their plans require a radical and time consuming restructuring of operations at Port Talbot along with significant government support.
“Business Secretary, Sajid Javid, appears to have signalled the government’s willingness to co-invest with a buyer on commercial terms to secure a sale of Tata’s remaining assets. “Whilst this news gives hope to Port Talbot, it also shows just how difficult it may be to find a buyer.”
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