Leadsom backs British Steel’s Turkish takeover

Military pension fund will keep furnaces alight, says minister

BRITISh Steel’s Turkish buyer is not a short-term speculator trying to make a quick profit, Andrea Leadsom has insisted.

Military pension fund oyak has a long-term plan for the business, the Business Secretary said – unlike its previous private equity owners.

She made the remarks in a conference call with MPs whose constituencies contain steel plants, amid growing fears that oyak could slash jobs.

She said that oyak bosses want to invest in British Steel and increase productivity, and the firm will be a responsible owner of a national asset which employs nearly 5,000 workers.

The company’s previous owner, Greybull capital, was heavily criticised for seeking financial aid after stripping £20m a year out of the company in interest and management fees.

It comes as it emerged that accountants from eY, appointed to help run British Steel after it went into liquidation, ran up fees of more than £13m.

They had been appointed by the court in May to assist the official Receiver to manage the company’s affairs.

Since May the Government has also bankrolled the business at a cost estimated at several million pounds a week.

Leadsom’s comments suggest the Government wants to differentiate the Turkish buyers from the venture capitalists who were also in charge of comet and Monarch when they went bust.

Anna Turley, Labour MP for Redcar, said there is a ‘real sense of positivity and optimism’ about the sale to oyak’s subsidiary Ataer holding.

She said: ‘The bid was successful due to their long-term vision for British Steel. They are not short-term speculators or private equity. Their investment time frames are long-term.

‘They want to invest in the company and increase productivity, and they believe British Steel should be a significant player globally.’

The company is the largest stakeholder in Turkish steelmaker erdemir and a serious player in the global industry, Turley said.

oyak’s mining and metals boss Toker ozcan has said that British Steel’s plant in Scunthorpe will be set a tough target of producing 3.15m tons of the metal a year, up from present levels of 2.75m tons.

he warned that the site is much less productive than those run by european rivals, sparking concerns for hundreds of jobs.

company bosses said they want to convert the plant to new greener methods of steel production.

ozcan said the company will look for taxpayer subsidies to make the move to a gas and then hydrogen-powered plants.

oyak is also under pressure to ensure British Steel remains free from Turkish political influence, with the Government facing calls to insist on legal guarantees.

British Steel was put into compulsory liquidation three months ago when talks between Greybull and the Government fell apart, and it has since been kept afloat by taxpayers.

The buyer was picked from several bidders including Britishbased Liberty Steel, which rescued mills in Wales, Yorkshire and Scotland in 2017. But the decision caused alarm in Westminster because of the links between oyak’s chairman, former army general Mehmet Tas, and President erdogan’s authoritarian government in Turkey.

Tory MP Julian Lewis, chairman of the Defence Select committee, said industries with a ‘ strong defence dimension’ should remain under British control. The deal is expected to be signed in two months for around £70m, with around £900m of investment promised.

A Department for Business, energy & Industrial Strategy spokesman declined to comment on what was said at the meeting between Leadsom ( pictured) and the MPs, saying it was ‘private’.