Engineering news
Tata Steel has confirmed a deal to sell its Long Products Europe business, including its Scunthorpe plant, to investment firm Greybull Capital.
While yet to be completed, the deal will save the jobs of 4,800 people that work in Tata’s Long Products Europe business, with 4,400 of those jobs based in the UK and 400 in France.
The sale will be in exchange for Greybull Capital taking on the whole of the business, which 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.
Bimlendra Jha, executive chairman of the stand-alone Long Products Europe business, said: “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.”
Business secretary Sajid Javid said the announcement was a step in the right direction for the long-term future of British steel manufacturing in Scunthorpe.
Javid added: “We will now look through the detail and stand ready to provide funding on a commercial basis if required.
“The UK and Welsh governments are working tirelessly to ensure that we can now reach a deal for Port Talbot and the other Tata sites across the UK. This agreement sends positive signals to any potential investor for the rest of Tata’s UK business.”
It has been reported that staff are being asked to accept a 3% pay cut for one year and reductions to company pension contributions. Workers are currently being balloted on the changes, which will be completed on 19 April.
The turnaround plan was drawn up by management at Scunthorpe with input from unions and refined by management consultancy firm McKinsey & Co.
Reports state that Greybull is not planning on any further restructuring or job cuts in addition to the 1,200 jobs losses that were announced at the Scunthorpe plant in October 2015, which involved the closure of one of two cover ovens at Scunthorpe and mothballing three plate mills.
Meanwhile, following recent advice from the Tata Steel Board to evaluate all options for the portfolio review of Tata Steel UK, the company has decided to commence the process of divestment of its entire shareholding in its subsidiary Tata Steel UK.
It has engaged the services of KPMG LLP as the advisers to the process while Slaughter and May will be the legal advisers to the proposed transaction. Tata Steel Europe will now begin reaching out to a wide range of potential investors globally.
The formal process has commenced with the despatch of the Summary Information Memorandum to potential investors. A company statement said: “Tata Steel and its advisers are committed to work together and conduct the process in a transparent and time bound manner.”