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Tata Steel begins formal sale of UK unit

International Business
Mon, 11 Apr 2016
AFP


Indian giant Tata Steel announced Monday the sale of a major European division employing 4,800 people in Britain and France, as it placed the rest of its loss-making British operation on the market.

The British government has been scrambling to find a buyer for Tata's assets – and save 15,000 jobs – after the company's shock announcement last month it was selling its British operation due to a global oversupply of steel, cheap imports into Europe, high costs and currency volatility.

Britain's Business Secretary Sajid Javid told parliament that the government could co-invest with private sector bidders in a bid to keep Tata Steel's UK assets going.

As it kicked off the sale process, Tata Steel said it had agreed to sell 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.

"This transaction will offer a future for the LPE business and its 4,400 employees in the UK," said Hans Fischer, chief executive of Tata Steel's European operations.

Tata Steel is still looking for a buyer for the rest of its British assets including the Port Talbot works on the south Wales coast, Britain's biggest steel plant, which employs 4,000 workers.

The LPE deal is expected to complete within eight weeks, subject to conditions being met.

LPE, which will be renamed British Steel, was sold for a nominal £1 ($1.40). Greybull said it is arranging a £400 million investment and financing package as part of the deal.

The sale also includes two mills, a port terminal, an engineering workshop and a design consultancy, all in Britain, as well as a mill in northeast France which employs 400 people.

After a fortnight of pressure from the opposition, trade unions and the press over the government's handling of the crisis, Javid said they could get involved in the sale of Tata Steel's remaining UK operations.

He said he had been in contact with potential buyers.

"This includes looking at the possibility of co-investing with a buyer on commercial terms," he said, adding that the best way forward would be a sale to a private buyer.

He flew to India last week to meet company executives and has said the government will make every effort to secure a serious buyer for the Port Talbot plant and other assets.

Tata Steel Europe's group executive director Koushik Chatterjee said he wanted to sell their British assets as a whole rather than splitting up the business.

"We will run this process in a credible manner but it is important we don't have a very long, uncertain period for the employees, suppliers and customers," he said.






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