BY Itrat Bashir
Tata Steel has sold its Long Products Europe (LPE) division based in Scunthorpe, North Lincolnshire, to Greybull Capital and it will be renamed as British Steel. This move will safeguard 4,400 UK jobs.
Tata Steel UK Limited made the announcement yesterday of the signing of an agreement to sell its Long Products Europe business. The sale covers several UK-based assets, including the Scunthorpe steelworks, 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.
According to the Tata Steel’s spokesperson, the sale for a nominal consideration would be in exchange for Greybull Capital taking on the whole of the business, including assets and relevant liabilities, and securing an appropriate funding package.
The deal will be completed once a number of outstanding conditions have been resolved, including transfer of contracts, certain government approvals and the satisfactory completion of financing arrangements. The Long Products Europe business employs 4,800 people – 4,400 in the UK and 400 in France.
In a statement, Bimlendra Jha, Executive Chairman of the stand-alone Long Products Europe business, said that this move marks a significant milestone in the sale of the Long Products Europe business. “This sale is the best possible outcome for employees who have worked relentlessly to ensure the business’s survival, and helped to make it attractive to a potential buyer.”
The spokesperson said, “The agreement follows an accelerated process of negotiations between Tata Steel UK and Greybull Capital who have worked constructively together. The agreement is an important milestone on the road towards continuing steelmaking in Scunthorpe and steel processing in other locations in the UK and France.”
Hans Fischer, Chief Executive of Tata Steel’s European operations, also welcomed the news. He said that under these current challenging market conditions in Europe with the soaring levels of imports from China, they are happy that Tata Steel UK and Greybull Capital have entered the final stage of completion of the sale of shareholding in Longs Steel UK. “This transaction will offer a future for the Long Products Europe business and its 4,400 employees in the UK,” he added.
Greybull Capital, a British-based family investment office, also confirmed the news and said that they have reached a binding sale and purchase agreement with Tata Steel to acquire its Long Products Europe (LPE) division based in Scunthorpe, North Lincolnshire (UK).
The spokesperson of Gerrybull said following completion of the deal, LPE will trade under the brand name British Steel. “The deal is expected to complete within eight weeks, subject to certain conditions being met. These include the satisfactory completion of the financing arrangements for LPE and of notation agreements with key suppliers,” he added.
According to him, as part of the deal, Greybull is arranging a £400m investment and financing package for the new business. The financing, provided principally by a combination of banks and shareholders, will be available to fund working capital and future investments. An agreement to reset the cost base of the business has been reached with key suppliers and, importantly, trade unions. Greybull believes these vital changes will make British Steel competitive. The trade union agreement is subject to a ballot of union members, which will take place over the next few weeks.