Greybull to buy Tata Steel long products

UK INVESTMENT firm Greybull Capital has agreed to buy Tata Steel’s long products Europe (LPE) business for “a nominal consideration”.

The business includes steelworks in both the UK and France. In the UK there is the LPE steel works in Scunthorpe, LPE’s associated sales and distribution network, two steel mills in Teesside, an engineering workshop in Workington and a design consultancy in York. In France, there is a steel mill in Hayange, in the northeast of the country. LPE presently employs 4,800 people, of which 4,400 are in the UK.

The agreement came as a result of accelerated negotiations between Greybull and Tata, which announced in March that it was selling all its unprofitable UK operations. Greybull has arranged a £400m (US$570m) investment and financing package with banks and shareholders, which it says will fund working capital and future investments. The company says it has also reached agreements with trade unions and key suppliers which will help to make LPE –  to be known as British Steel following completion of the deal – competitive again.

British Steel was the name previously used by the privatised UK steel industry from 1988–1999 when it merged with Koninklijke Hoogovens to form Corus, later bought by Tata.

LPE’s existing management team has agreed to stay on, while Greybull seeks a new, permanent CEO. Greybull partner Marc Meyohas said that he believes LPE has great potential to become a strong business, and praised its “highly skilled workforce”.

“I would personally like to thank Tata Steel, the trade unions and the British and French governments for their support, which was essential in ensuring the agreement. We are now focussed on taking the deal to completion in order that the business can start its next chapter with confidence,” he said.

The news is being seen as a huge boost to the beleaguered UK steel industry, which has slumped largely as a result of imports of cheap, subsidised steel from China, but also due to the strong pound and high electricity costs. Both Tata Steel and SSI have announced works closures and job cuts in the last 12 months.

The national officer for union GMB, David Hulse, said that the news is a “welcome development”, but echoed calls from many for the UK government to support the industry and secure “a level playing field”. Roy Rickhuss, general secretary of the steelworkers’ union, Community, also called for government action.

He added: “There are still crucial steps to be taken to complete the deal and all parties involved need to retain their focus towards achieving the objective of securing the future of Long Products. Community’s independent expert, Syndex, has assessed that the transformation plan for the business is robust and Greybull has the necessary capabilities to build a sustainable business.”

The business secretary Sajid Javid said that the deal between Tata and Greybull is “a step in the right direction”.

“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,” he said.

Previous negotiations between Tata and Klesch to buy LPE, which were announced in 2014, fell through.