Tata Steel might hold on to UK steelworks

British PM said to be keen on averting collapse of country's steel industry

 

Tata Steel might still hold on to its UK steelworks and their proposed sale put off, after a personal intervention by Prime Minister David Cameron, keen on averting a collapse of Britain’s steel industry ahead of the European Union referendum, a media report said on Sunday.

The Sunday Times quoted sources that a sale of Port Talbot in Wales, the UK’s largest steelworks, and steel mills owned by the Tata Group around the country, could be put off as the steel crisis prompted a series of offers from the government, including multi-million-pound loans and taking a 25 per cent stake in the business.

“Sources said sale of Port Talbot, and steel mills around the country, was looking increasingly unlikely. Tata began contemplating retaining the vast South Wales site after personal intervention from Cameron,” the daily said.

“The Prime Minister is desperate to avert the collapse of Britain’s steel industry ahead of the EU referendum on June 23,” it said.

Last week, the government proposed a law change to slash the liabilities of the £14-billion British Steel Pension Scheme, underwritten by Tata and with a £700-million deficit.

Annual rises in payouts from the final salary scheme would be linked to inflation as measured by the consumer prices index instead of the generally higher retail prices index.

The change would cut £2.5 billion off the scheme's liabilities, which its trustees believe would keep it out of the Pension Protection Fund and smooth the path to a sale of Tata Steel UK.

This and other government measures could also help to reverse losses at Port Talbot,  as high as £1 million a day last year, and persuade Tata to hang on to the business, sources told the newspaper.

However, Tata Group has stressed it is “committed to the sales process”.

While the firm is yet to publicly reveal any shortlisted bidders for its UK units, the three still in contention are believed to be Liberty House, run by Indian-origin businessman Sanjeev Gupta, London family investment fund Greybull Capital, and Leeds-based turnaround fund Endless, believed to be backed by American billionaire Wilbur Ross.