Tata Steel is in talks to sell its European long products business to an investment group in a move that could safeguard 4,700 jobs and keep open several British plants threatened with closure.
Tata said it had entered exclusive talks with Greybull Capital to sell a number of plants including its steelworks in Scunthorpe, Lincolnshire, and mills at Dalzell and Clydebridge in Scotland that are being mothballed.
Other sites included in the talks are mills in Teesside and northern France, an engineering workshop in Workington, Cumbria, and a design consultancy in York. Tata has been trying to sell the long products business, which makes railway track and steel used in construction, amid a supply glut and tumbling prices.
The company, which owns the remnants of the former British Steel, announced in October that it planned to cut almost 1,200 jobs at Scunthorpe and shut the mills in Dalzell, in Motherwell, and Clydebridge in Cambuslang, near Glasgow. Tata’s decision underlined the crisis facing the British steel industry after the closure of the Redcar steelworks on Teesside earlier that month.
If Tata and Greybull agree a deal, the planned job cuts are likely to be go ahead but the remaining 4,700 jobs will probably be preserved. Greybull is understood to believe there is a long-term future for the long products business, which is one of a few makers of specialist goods for established markets.
Karl Koehler, chief executive of Tata Steel Europe, said the talks were at an early stage but came at a critical time for the industry: “We have been working hard to explore all options that could provide a future for the long products Europe business. We will now move into detailed negotiations with Greybull Capital.”
Greybull is a family-run fund that invests in struggling companies in the hope of making a profit. Its investments have included the airline Monarch, which hasreturned to profit after nearly collapsing a year ago, Morrisons convenience stores, and the now defunct Comet electrical goods chain.
Greybull said: “Greybull Capital LLP confirms that it has signed a letter of intent with Tata Steel to enter exclusive discussions on the possible acquisition of the long products Europe business based in Scunthorpe, North Lincolnshire. Whilst this is an important milestone, much work remains to be done to reach a successful outcome.”
Tata said it had worked with unions and management to seek a future for the long products division. Unions gave the news a guarded welcome and said they wanted to find out more about Greybull’s plans.
Greybull is run by low-profile brothers Marc and Nathaniel Meyohas. Nathaniel worked for the US private equity firm Sun Capital before launching Greybull in 2010 with his brother, who founded and ran Cityspace, a technology company that provided information and technology for people using public transport.
Harish Patel, the Unite union’s national officer for metals and foundry, said: “This is good pre-Christmas news for the various sites, including at Scunthorpe. However, there is a lot of work to be done in formulating the details and the future business plan. We will need to consider whether jobs are safe with this potential sale, the impact on the supply chain, and whether the current terms and conditions for the workforce are affected.”
Community, the steel workers’ union, said it was unhappy that no plan was announced to save jobs at the Scottish plate mills, where 70 workers lost their jobs last week and more face redundancy.
The Scottish business minister Fergus Ewing said: “Our primary aim is to secure a future for Scottish steel. While the development is potentially welcome, the agreement between Tata Steel and Greybull Capital LLP is still at a very early stage and there can be no guarantees it will proceed – or that it will lead to a secure future for jobs at the plants involved.”
[Source:- the gurdian]