A package of support worth hundreds of millions of pounds will be made available on commercial terms to potential buyers of Tata Steel, the UK and Welsh governments have announced.
The move followed another visit to Mumbai by Business Secretary Sajid Javid to meet Tata’s chairman Cyrus Mistry on Tuesday where the minister said progress on the sales process had been made.
The future of Tata’s Hartlepool site, in Brenda Road, which employs 500 people, was thrown into doubt last month when the firm announced its intention to sell all UK assets.
The Business Department said the financial support package will be tailored to the purchaser’s strategy and financing needs.
It is expected that all, or the large majority, will be through the provision of debt financing. Other options include providing hybrid (convertible debt) or alternative forms of financing and supporting a purchaser’s financing by taking a minority equity stake of up to 25% to support any sale.
The Government said it was actively working with Tata Steel and the British Steel Pension Scheme’s trustees to find a solution that will help minimise its impact on a potential purchaser, and potentially separate it from the business.
Mr Javid said: “This Government is committed to supporting the steel industry to secure a long-term, viable future and we are working closely with Tata Steel UK on its process to find a credible buyer. The detail of our commercial funding offer is clear evidence of the extent of that commitment.
“Ministers have visited Tata Steel sites across the country and the pride and dedication of the highly skilled men and women working there is obvious to see. We have already delivered on energy compensation, on tackling unfair trading practices and on procurement of British steel, and we will keep on going further to support this vital industry.”
First Minister of Wales Carwyn Jones said: “We’re committed to supporting any credible bid to secure steel making in Wales. We have worked with the UK Government to put in place this significant package of support and we believe that this will help secure a successful sale of Tata Steel’s operations in Wales and the rest of the UK.”
Today’s announcement follows the start of a formal sales process of Tata’s loss-making UK assets.
In addition to the support package, the UK and Welsh governments said they will also be willing to consider additional grant funding support, for example to support the development of power plant infrastructure, energy efficiency and/or environmental protection measures, R&D and training.
A management buyout has emerged as a potential saviour of Tata and thousands of jobs which depend on the steel industry.
Stuart Wilkie, managing director of Tata’s Strip Products, based in Port Talbot in south Wales, has canvassed workers about joining a bid.
The investment he is seeking from employees could be as much as £10,000 each, according to sources. Private investors and government support would also be needed.
The Prime Minister’s official spokeswoman told a media briefing that the support would come in the form of debt financing.
“It would be supporting a potential buyer in order to keep the opeartion safe. We would work alongside a potential buyer to make sure that the Government is doing what it could to support a viable sale.
“If we were to take an extra stake it would be a minority one with the aim of supporting the purchaser in delivering a long term future for the business, we are certainly not seeking to be controlling the company.”
Asked if it was part nationalisation, she replied: “I am not sure we would accept the concept of ‘part’ nationalisation. We will be investing on a commercial basis. We would not see this as nationalisation. We would not be seeking to acquire a control in the business. We don’t think that nationalisation is the right answer.”