Tata Steel Off­loads Long Prod­ucts Biz in Europe

Buys as­sets for an undis­closed nom­i­nal amount, to bring in pack­age of £400 mil­lion for busi­ness

The Economic Times - - The Jaitley Interview -

Mum­bai: Tata Steel has sold its long prod­ucts busi­ness as­sets in Europe­fora­nundis­closed‘nom­i­nal’ amount to in­vest­ment firm Grey­bul­lCap­i­tal,start­ingth­eendof its un­suc­cess­ful foray into the UK and leav­ing the buyer with ‘rel­e­vant’ li­a­bil­i­ties, 4,400 em­ploy­ees and an ex­pen­sive turn­around task.

Grey­bull Cap­i­tal will bring in a pack­age of £400 mil­lion pro­vided by a com­bi­na­tion of banks and its share­hold­ers, to fund work­ing cap­i­tal and fu­ture in­vest­ments in the busi­ness.

The long prod­ucts busi­ness deal in­cludes Scun­thorpe steel plant, mills in Teesside and north­ern France, an engi­neer­ing work­shop in Work­ing­ton, a de­sign con­sul­tancy in York, a bulk ter­mi­nal, and as­so­ci­ated dis­tri­bu­tion fa­cil­i­ties.

Late last month, Tata Steel had de­cided to en­tirely exit its poorly per­form­ing UK steel busi­ness, giv­ing up on ef­forts to turn around the busi­ness it bought as part of the takeover of Corus at the height of the com­mod­ity boom in 2007. The com­pany has suf­fered al­most a decadeof loss­esamid­po­orde­man­dand cheap Chi­nese im­ports.

Tata Steel stock has gained 9% in value since the de­ci­sion.

“Un­der these cur­rent chal­leng­ing mar­ket con­di­tions in Europe with the soar­ing lev­els of im­ports from China, we are happy that Tata Steel UK and Grey­bull Cap­i­tal have en­tered the fi­nal stage of com­ple­tion of the sale of share­hold­ing in Longs Steel UK,” said Tata Steel Europe CEO Hans Fischer in a state­ment.

Tata Steel has about $4 bil­lion, or about ₹ 26,500 crore, of debt on its UK bal­ance sheet out of its to­tal con­sol­i­dated debt of about $11.3 bil­lion, or about ₹ 75,000 crore. The com­pany does not dis­close debt re­lated to in­di­vid­ual steel­mak­ing fa­cil­i­ties in the UK. Last year, it wrote off ₹ 5,000 crore re­lated to the long prod­ucts busi­ness,bring­ingth­e­book­val­ueof the as­sets to zero.

An an­a­lyst who did not wish to be named said Tata Steel has not shared de­tails on cash burn and debt tied with the long prod­ucts busi­ness, mak­ing it tough to quan­tify the im­pact of the deal.

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