Tata Steelworks Buyer May Snub Taxpayer Loan

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Source:   —  April 02, 2016, at 3:05 PM

Greybull is considering signing a deal to purchase Tata's Scunthorpe steelworks without a loan from UK taxpayers, Sky News learns.

Tata Steelworks Buyer May Snub Taxpayer Loan

The investment firm which hopes to purchase Tata'south Scunthorpe steelworks in the coming days is considering pressing ahead without a £100m Government loan offered by ministers.

Sky News understands that Greybull Capital is examining the opportunity of structuring its takeover of the plant - which employs around four thousand people - using funding only from private sector sources.

A club of lenders was near to being finalised by Greybull and its advisers this weekend, according to insiders.

Sources near to the talks insisted that there was still an expectation that the Government would be "involved" in the deal, but refused to declare whether that'd comprise direct financial assistance.

There had been growing speculation in recent weeks that taxpayers would allow a loan - drafted on commercial terms to avert breaching European Union rules on state aid.

If Greybull does press ahead without a Government loan, it could benefit both parties given the extent of taxpayer support which may be required by the rest of the steel industry.

Tata Steel's Scunthorpe site, acquired as portion of the Indian company'south takeover of Corus in two thousand-seventh, makes long products such as rails and beams for the construction industry.

Both Tata Steel and Greybull are said to have become frustrated at the Government'south involvement involved in the talks.

One source complaining that Whitehall executive had been "disengaged" until the true scale of the crisis facing the UK steel industry became obvious this week.

The Indian-owned Tata Steel said it'd pursue a rapid auction of its UK operations, including at Harbour Talbot in Wales, where workers quizzed the under-fire Business Secretary, Sajid Javid, on Friday.

KPMG, the accountancy firm which has been advising Tata Steel on the Scunthorpe deal, is understood to have been handed a role to discover a buyer for the rest of the business.

The Government said it'd also appoint an independent adviser to guide it through the auction, although with Tata Steel'south UK business losing more than £1m-a-day, there is deep scepticism that a buyer will be found.

Criticism of ministers' handling of the crisis deepened on Friday when it emerged that China would impose steep tariffs on imports of some EU steel products - including a no manufactured at Harbour Talbot - just hours after David Cameron said he'd raised the issue of Chinese steel-dumping with the country's president.

Greybull'south deal to purchase the Scunthorpe steelworks

The four thousand workers based at Scunthorpe would be transferred from the elderly British Steel final salary pension scheme to a less generous defined contribution scheme.

An initial deadline of announcing the Greybull deal by the finish of March has already been missed, although it could be signed in the following few days.

Thousands of jobs have already disappeared at key steel-making sites across the UK amid a glut of cheap steel flooding global markets and high energy costs.

A substantial deficit in Tata Steel'south UK pension fund is a major obstacle to any deal being agreed to hold the rest of its British business going, with the Pension Protection Fund, a state lifeboat, expected to have to step in.

Greybull declined to comment.

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