International firms express interest in Tata Steel plants

Firms from the UK, India, China and the United States have expressed an interest in buying the UK assets of Tata Steel.

Wednesday, 25th May 2016, 8:36 am
Updated Wednesday, 25th May 2016, 9:43 am
Tata Steel, Hartlepool.

Final bids were made earlier this week and a shortlist of two or three is expected to be drawn up by the Tata board at a meeting in Mumbai.

The future of Tata’s Hartlepool site, in Brenda Road, which employs 500 people, was thrown into doubt 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.

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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.

The favourites to be shortlisted are:

- Excalibur. A management buyout team led by Stuart Wilkie, director of Tata's strip products. It has warned that up to 1,000 jobs could be cut if it takes over Tata, and would want employees to invest in the business.

- Liberty House. Owner Sanjeev Gupta was the first to show an interest when Tata announced the shock decision to dispose of its loss-making UK business in March. He talked about changing the method of production to one using recycled steel. It is believed that plants such as the UK's biggest at Port Talbot, South Wales, would continue with current production methods, preserving jobs, for a set period of time before changes are made. Liberty recently bought two steel rolling mills in Scotland. Excalibur and Liberty have held talks, leading to speculation of a joint bid.

- Greybull Capital. A turnaround company which recently bought Tata's plant in Scunthorpe, saving thousands of jobs.

Other firms expressing an interest in taking over all or part of Tata Steel are:

- JSW Steel. India's second biggest steel producer emerged 10 years ago through a merger of two small businesses and now has six plants.

- Hebei Iron and Steel. China's biggest steel producer and one of the largest in the world.

- Endless, a Leeds-based private equity firm.

- Nucor, the biggest steelmaker in the United States, which built its business around small-scale mills recycling steel from scrap using arc furnaces.

German steelmaking group ThyssenKrupp also expressed an interest but is not believed to have put in a bid.