Mumbai: Tata Steel Ltd, which is trying to sell its European long-products steel business to Greybull Capital LLP, is in talks to provide a working capital loan of as much as $400 million (Dh1.46 billion) to the private equity firm to help seal the deal, people with knowledge of the matter said.
The two companies, which entered into exclusive talks for the sale in December, have assured trade unions that employees will not be laid off at the plants, one of the people said, asking not be identified because the discussions are private. The agreement covers Tata Steel’s Scunthorpe steelworks in England, as well as mills in Teesside and northern France.
Tata Steel wants to sell its UK operations amid a collapse in prices of the alloy as Chinese demand slows for the first time in a generation, spurring local mills to flood markets with record exports. Klesch Group withdrew from talks to buy the unit in August saying the industry was “bleeding to death.”
Tata Steel, which bought Corus Group Plc for about £6.2 billion ($8.9 billion; Dh32.45 billion) in 2007, has been cutting operations in the UK since the 2008 global financial crisis. The country’s industry has been further hit by the Chinese-driven crisis in international markets with plants closing and thousands losing their jobs.
Chanakya Chaudhary, a spokesman for Tata Steel, didn’t answer calls made to his mobile phone. Greg Wood, a partner at Bell Pottinger, an external communications company for Greybull, declined to comment.
The UK’s Department of Business is considering a loan of up to £400 million as part of Greybull’s takeover of the Scunthorpe business, the Sunday Times reported on January 17 citing unidentified sources.
Tata Steel had a debt of $10.96 billion as of Sept. 30, according to data compiled by Bloomberg.
Fact box: Tata Steel ‘to cut 1,050 jobs in Britain’
London: Tata Steel, the biggest steelmaker in Britain, will axe 1,050 jobs in the country, Sky News reported on Sunday, on top of the 1,170 cuts it announced last year due to low steel prices. The steelmaker said in October it would cut 900 jobs in Scunthorpe in Northern England and 270 in Scotland. On Sunday, Sky News reported the firm would cut 750 jobs at its Port Talbot plant in Wales and 300 at other British sites. British steelmakers pay some of the highest energy costs and green taxes in the world and are also struggling to compete with record Chinese steel imports. Tata Steel did not immediately respond to a request for comment when contacted by Reuters. Sky News said the company was to announce the cuts on Monday.
(Reuters)
