Provisional deal reached to buy British Steel

A tentative deal has been reached to rescue Scunthorpe-based British Steel from insolvency.

A Turkish military pension fund says it intends to take over British Steel, which employs 5,000 people, by the end of this year. The fund is called Onyak and it has an investment arm known as Ataer.

However, the Financial Times has reported that a productivity drive by British Steel’s new owners could lead to several hundred job losses.

In an interview with the paper, Toker Ozcan, head of the mining metallurgy group at Onyak, would not comment on the scale of possible job cuts but said productivity at the main plant in Scunthorpe was “very low” compared with other European steel producers.

British Steel owns Scunthorpe steel works where 3,000 staff are based work and it employs another 800 people on Teesside. It also has a Rotherham site. The business was put into compulsory liquidation in May after rescue talks with the Government failed to secure a deal.

The company was transferred to the Official Receiver because British Steel, its shareholders and the Government could or would not back the business.

In a statement, the Official Receiver confirmed: “Following discussions with a number of potential purchasers for the British Steel group over the past few weeks I am pleased to say I have now received an acceptable offer from Ataer Holdings AS for the purchase of the whole business and I am now focusing on finalising the sale.

“I will be looking to conclude this process in the coming weeks, during which time British Steel continues to trade and supply its customers as normal. I would like to thank all employees, suppliers and customers for their continued support which has been essential to get to this point.”

THE Hull & Humber Chamber of Commerce has welcomed news of the deal. The Chief Executive of Hull & Humber Chamber of Commerce, Dr Ian Kelly, said: “We are big supporters of British Steel in Scunthorpe whose local management and staff have operated heroically through these challenging times.

“We continue to support at a national and local level their business demands for a level playing field with Europe and China and the wider need for UK plc to have a British steelmaking capacity.

“British Steel is a key part of a vital foundation industry, crucial to our construction, rail and manufacturing capacity in the UK and its importance will only grow after Brexit when having our own locally based steelmaker will help to ensure we remain competitive and are not over-charged by foreign steelmakers for our key future infrastructure projects.

“Most importantly, it is also fantastic news for Scunthorpe and Northern Lincolnshire where so many people rely on the current British Steel for their livelihoods.

“We look forward to Ataer, Oyak’s investment arm, completing the deal with the Official Receiver and buying the company out of receivership by the end of this year.”

Ataer already owns almost 50% of Erdemir, which is Turkey’s biggest steel producer.

British Steel is the UK’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 a 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 stay afloat over the next few months.