Government to back Tata rescue deal
Attempts to bailout Tata Steel UK’s Scunthorpe site could receive Government backing in the form of an £80m loan.
The Department for Business, Innovation and Skills (BIS) is preparing to support a buyout of the ailing steelworks operator in an effort to save 4,000 jobs, the Sunday Telegraph reported.
Steel industry sources told the paper that BIS will provide a loan of between £70m and £80m to Greybull Capital. The private equity fund has been in talks to save Tata’s Scunthorpe steelworks since December.
Greyhound’s proposals are expected to total £400m. In addition to up to £80m Government cash, around £170m is thought to come from a banking consortium and £150m from Greyhound’s own fund to provide working capital.
Tata is selling its “long products” division and has set a cutoff of the end of March to reach a deal. The division mainly comprises Tata’s Scunthorpe operations, as well as mills in Teesside and Hayange, northern France.
Despite turnover of £1.6bn, the long products division is expected to record £100m loss this year. Advisers think restructuring could deliver profits of £100m within 24 months following a buyout.
The Scunthorpe, Teeside and Hayange mills are expected to face closure if the deal is not agreed.
