British Steel ordered into compulsory liquidation

Manufacturer British Steel has been ordered into compulsory liquidation, putting thousands of jobs in the UK at risk and endangering 20,000 in the supply chain.

Around 5,000 jobs across sites in Scunthorpe, Rotherham, and Middlesborough and several other sites could be in danger.

The Government’s official receiver is the compulsory liquidator while the court has appointed Sam Woodward, Hunter Kelly and Alan Hudson of EY’s restructuring team as special managers.

The news follows a number of weeks of negotiations by management with the company’s various stakeholders, including their lenders, shareholders and government to secure the necessary funding to avoid an insolvency.

“Regrettably, these efforts were unable to secure a solution before the company’s funding resources were exhausted,” a statement said.

The other companies within the British Steel group are continuing to trade as normal and are not in insolvency.

“The Official Receiver and Special Managers will be working closely with all parties to secure a solution.  To this end they have commenced a sale process to identify a purchaser for the businesses. The appointment of the Official Receiver and the funding available will enable the ongoing trading of the businesses, whilst a purchaser is sought.”

It was confirmed that all employees wages for May have been paid with the assistance of the company’s senior lenders and they will continue to be paid as normal so long as they continue to turn up for to work.

At this stage no notices of redundancy have been served.

A statement added: “British Steel is a world leading producer and supplier of quality long steel products which is recognised globally.  It is also a strategic supplier to a number of important industries, including rail, automotive and construction.

“The appointment of the Official Receiver provides the companies with additional funding and thus stability whilst a sales process to secure a buyer is conducted. During this time, British Steel will continue to trade as normal and we look forward to the support of customers, suppliers and employees to ensure a successful outcome.”

The company has been lobbying the government for backing, having asked it for a loan of £75m to keep afloat.

British steel is the country’s second-largest steel producer, and is owned by private equity firm Greybull Capital which acquired it in 2016 from Tata Steel for £1.

Following the acquisition, it looked like the turnaround was proving successful, with the manufacturer reporting EBITDA of £68m in 2018, compared to £47m in 2017.

However earlier this year it was forced to borrow £120m from the Department of Business, Energy and Industrial Strategy to pay its EU carbon emissions bill, and reportedly asked for a further £75m to enable it to continue trading over the next few months.

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