Tata Steel Offloads Long Products Biz in Europe
Buys assets for an undisclosed nominal amount, to bring in package of £400 million for business
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.