British Steel: Turkish pension fund likely to be preferred bidder
The government is close to entering exclusive talks with a Turkish military pension fund about the sale of British Steel, raising hopes that more than 4,000 jobs and the Scunthorpe steelworks can be saved.
Three bidders remain in the running to buy the company, but a source who took part in a conference call with the business secretary, Andrea Leadsom, on Thursday morning said two were likely to be excluded imminently.
Several sources said the frontrunner was Ataer Holdings, owned by the Turkish military pension fund Oyak, which is also the largest shareholder in the Turkish steelmaker Erdemir. The Guardian has approached Oyak for comment.
The government’s official receiver, David Chapman, and the accountancy firm EY, who are managing the sale, are likely to name Ataer as the preferred bidder within days.
A period of due diligence would follow, with the likelihood of a final deal likely to be contingent on the extent of the government’s financial support.
Sources close to the situation said the chances of such support being forthcoming had been boosted by the change of government, highlighting the appointment of Simon Clarke as exchequer secretary to the Treasury. The department is likely to be pivotal in talks about government involvement in a rescue.
Clarke is MP for Middlesbrough South and East Cleveland, a steel heartland that includes British Steel’s special profiles division at Skinningrove. He has previously written about the importance of saving British Steel.
The Labour MP Anna Turley, whose constituency included the Redcar steelworks which closed in 2015, said she had asked the government for assurances about selling British Steel as a whole entity. “The secretary of state and EY confirmed this is still the priority,” she said. “Everyone is working flat out to progress the sale to the next stage. Optimism that this can be achieved soon remains high.
“We also discussed the commitments we would like to see from any buyer, including investment in the assets, enhanced training and protection of the terms and conditions of the workforce. Long-term commitment to the business and the UK steel industry is a priority too.”
The pace of talks has accelerated in recent weeks as pressure grows from lenders to the business, whose operations have been funded by the government while talks continue. If the company had collapsed, the government would have had first call on any money that could be retrieved, limiting the extent of creditor refunds.
A spokesperson for the Department for Business, Energy and Industrial Strategy said: “This government will leave no stone unturned to get a good solution for British Steel at Scunthorpe, Skinningrove and on Teesside.”
If discussions with Ataer break down, two other bidders are waiting in the wings although a deal with either could prove complicated.
Liberty Global, led by the Indianborn metals tycoon Sanjeev Gupta, would prefer to convert the Scunthorpe works from a blast furnace plant, which makes steel from scratch. It is seeking government loan guarantees to replace the blast furnaces with electric arc furnaces, which would be used to make products by recycling scrap steel.
Greybull Capital, the investment group that owned British Steel when it collapsed into insolvency, is understood to remain interested in picking up parts of the business if the government’s preference for selling the whole business does not materialise. In that scenario, the Scunthorpe steelworks would be likely to close for good.
Allowing Greybull to cherrypick the best parts of a business that it owned when it collapsed could prove politically unpalatable, observers have said.