Andrew has welcomed today’s joint announcement by Tata Steel UK Limited and Greybull Capital LLP regarding the future of Scunthorpe steel works.
An agreement has been signed for Tata Steel UK Limited to sell its Long Products Europe business to the family investment office, Greybull Capital. The sale for a nominal consideration, would be in exchange for Greybull Capital taking on the whole of the business, including assets and relevant liabilities, and securing an appropriate funding package.
The deal would be completed once a number of outstanding conditions have been resolved, including transfer of contracts, certain Government approvals and the satisfactory completion of financing arrangements. The Long Products Europe business employs 4,800 people – 4,400 in the UK and 400 in France.
Andrew commented, “I am pleased that a sale purchase agreement for the Scunthorpe steel works has now been agreed. This is something we have all been working on for some time and something I have kept residents updated on. If the sale is completed the site would be re-branded as British Steel.
Today's news is to be welcomed but there are still a few issues to be resolved before the purchase is completed which is why we must remain cautious. The Government stands ready to help resolve these remaining issues.”
Bimlendra Jha, Executive Chairman of the stand-alone Long Products Europe business, said: “Today marks a significant milestone in the sale of the Long Products Europe business. This sale is the best possible outcome for employees who have worked relentlessly to ensure the business’s survival, and helped to make it attractive to a potential buyer.”
Andrew received the following email from Greybull Capital LLP confirming the announcement:
Dear Mr Percy,
I am very pleased to inform you that Greybull Capital LLP has reached a binding sale and purchase agreement with Tata Steel to acquire its Long Products Europe (LPE) division. The transaction includes the LPE steel works in Scunthorpe, two mills in Teesside, an engineering workshop in Workington and a design consultancy in York along with a mill in Hayange, France. The transaction also includes LPE’s associated sales and distribution network.
The agreement has been possible because of the support of all of the various stakeholders involved, including yourself, for which we are most grateful. The deal is expected to complete within eight weeks, subject to certain conditions being met. These include the satisfactory completion of the financing arrangements for LPE and of novation agreements with key suppliers.
As part of the deal we are arranging a £400m investment and financing package for the business. The financing, provided principally by a combination of banks and shareholders, will be available to fund working capital and future investments. An agreement to reset the cost base of the business has been reached with key suppliers and importantly trades unions. We believe these vital changes will make the company competitive. The trades union agreement is subject to a ballot of union members which will take place over the next few weeks.
We believe Long Products Europe can become a strong business. It has a highly skilled workforce and great potential. Following completion of the deal we intend for the business to trade under the name of British Steel, re-instating a brand that will become synonymous with the high quality specialist products that the business will be producing. The existing management team will stay and run the business, implementing the plan that they have drawn-up to return the company to profitability. The search for a permanent CEO has started and an appointment will be made in due course. I’m also pleased to confirm that there are no plans for further job losses to those previously announced by Tata Steel.
Along with the existing management team we are very positive about the future. We are now focused on taking the deal to completion in order that the business can start its next chapter with confidence, at which time if you would like to meet or have a discussion I would be pleased to do so. In the meantime if you have any questions by all means contact me on this address.
Yours sincerely,
Photo - Andrew, Baroness Redfern and local MPs, Martin Vickers and Nic Dakin, meeting with the Prime Minister to discuss Scunthorpe.
