British Steel asks for loan after ‘Brexit-related issues’ hit
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Beleaguered manufacturer British Steel is asking the government for financial assistance just weeks after receiving a £120m loan to help pay its EU carbon emissions bill.
The company said it needs the loan to combat “Brexit-related issues” with reports saying it will need £75m to enable it to continue trading.
The Department of Business, Energy and Industrial Strategy has made no comment, but the company and its lenders, which include PNC and ABN Amro banks, have asked for a cash injection from the division. Reports indicate that if the department does not get on board with funding proposals, parts of the business will be placed in administration.
Steelworkers union Unite has urged the government to do “everything in its power” to aid the steelmaker, as well as “addressing the underlying problems facing the steel industry.”
British Steel’s main site is based in Scunthorpe, but it has sites in Rotherham and North Yorkshire as well as Teeside and Cumbria. It employs around 4,500 people across the UK. It is owned by Greybull Capital, which acquired the company from Tata Steel in 2016.
Many of British Steel’s customers place orders well in advance, and have turned to rivals due to the ongoing uncertainty around Brexit.
A British Steel spokeswoman said: “British Steel has the backing of its key stakeholders, including shareholders and lenders, and operations continue as normal.
“As the business navigates the significant uncertainties caused by Brexit, and explores options to strengthen the business for the long term, we are pleased to confirm that we have the required liquidity while we work towards a permanent solution.
“We are grateful for the support that our stakeholders and the British Government have provided to date.”
Unite national officer Tony Brady said: “Unite will be seeking urgent assurances about our members’ futures at British Steel, a company which helps sustain thousands of job in the local economy and wider supply chain.
“Having just secured a big order for rail, Unite is firmly of the view that British Steel can and should have a bright future.
“Brexit is hitting sales and creating uncertainty not just for British Steel, but for the wider industry. At the same time high energy costs are leaving steelmakers competing with their European competitors with one hand tied behind their backs.”
At the beginning of this month, it was speculated that British Steel would be receiving a £100m loan from the government. The business department later announced that it would be in fact loaning the company £120m to enable it to pay its EU carbon emissions bill.
The bill is supposed to be paid for with credits from the previous year, but British Steel had already spent its allotment and turned to the government for assistance.
British companies are being blocked out of regulatory decisions on carbon emissions trading systems due to the stalemate over the country’s exit from the EU.
A British Steel spokesperson said: “The uncertainties around Brexit are posing challenges for all businesses including British Steel, and we are holding constructive discussions with our stakeholders on how to navigate them.”