Scun­thorpe sale raises Tata loss

The Sunday Telegraph - Money & Business - - Business - By Alan Tovey

TROU­BLED steel com­pany Tata took a £200m hit on the sale of its strug­gling “long prod­ucts” busi­ness to turn­around investor Grey­bull.

An­nual ac­counts filed at Com­pa­nies House for Tata Steel UK (TSUK) re­veal the for­mal sale of the Scun­thor­pe­based busi­ness in May 2016 for a nom­i­nal £1 put a ma­jor hole in the com­pany’s fi­nances. New owner Grey­bull agreed the deal the pre­vi­ous month, say­ing it would de­liver a “cost-led turn­around”.

It soon re­named the busi­ness as Bri­tish Steel, bring­ing back to life a name that was once a main­stay of UK in­dus­try. Bri­tish Steel took on 4,500 work­ers in the sale as TSUK re­struc­tured to­wards higher-mar­gin prod­ucts in the face of heavy losses, and soon the new owner an­nounced the long prod­ucts op­er­a­tion had “been prof­itable for months”.

How­ever, TSUK ex­ec­u­tives have since said they are pri­vately “fu­ri­ous” at what they see as Bri­tish Steel claim­ing the ben­e­fits of their work to get the busi­ness back on its feet, which in­cluded a painful re­struc­tur­ing that saw al­most 1,000 re­dun­dan­cies ahead of the sale.

TSUK ac­counts for the year to the end of March 2017 also in­di­cate that £74m of stock and raw ma­te­ri­als were trans­ferred as part of the dis­posal, which a source close to the deal said was likely to be paid back by the new own­ers over time.

The loss on Scun­thorpe was a ma­jor con­trib­u­tor to TSUK mak­ing an an­nual pre-tax loss of £558m, up from £426m in the pre­vi­ous pe­riod. This came de­spite rev­enue edg­ing up 1pc to £1.99bn.

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