Tata Steel, Investment Firm Shake Hands on Sale of Long Products Business
04/11/2016 - Tata Steel has reached a deal to sell its European long products business to private investment firm Greybull Capital, the company has announced.
Tata Steel is selling the business, which includes its integrated Scunthorpe works, for a nominal amount. In exchange, Greybull is assuming certain liabilities and will be responsible for putting together the funding to reboot the business.
“Today marks a significant milestone in the sale of the Long Products Europe business. This sale is the best possible outcome for employees who have worked relentlessly to ensure the business’s survival and helped to make it attractive to a potential buyer,” said Bimlendra Jha, executive chairman of Long Products Europe.
The business employs 4,400 people in the U.K. and 400 in France. In addition to the Scunthorpe works, it is made up of two mills in England; an engineering workshop and a design consultancy, which also are in in England; associated distribution facilities; and a rail mill in France.
The Reuters news agency reported that Greybull is putting together a US$570 million investment and financing package for the business. Reuters said the agreement is expected to be completed in eight weeks, pending, among other things, a vote by union members.
Officials at the Unite union told The Guardian newspaper that they are being asked to accept a one-year pay cut of 3 percent and changes to their pension plan. The changes to pay and pensions are part of the existing turnaround proposals put in place by Tata before it agreed to the sale, the newspaper said.
If the deal is completed, the business is to be renamed British Steel, which has been out of use for nearly 20 years, according to reports.
On another front, Tata Steel has opened the formal sales process for the rest of its U.K. business, which includes the integrated Port Talbot works, it announced. Tata said it has named KPMG LLP as the advisers to the process.
The law firm Slaughter and May has been named as legal adviser.
“It is the intention of Tata Steel Europe to run a thorough, but expedited sale process by reaching out to a wide universe of potential investors globally,” the company said in a statement.
Tata announced in March that it no longer saw a profitable future for its U.K. business and would look to divest the operation.
“Today marks a significant milestone in the sale of the Long Products Europe business. This sale is the best possible outcome for employees who have worked relentlessly to ensure the business’s survival and helped to make it attractive to a potential buyer,” said Bimlendra Jha, executive chairman of Long Products Europe.
The business employs 4,400 people in the U.K. and 400 in France. In addition to the Scunthorpe works, it is made up of two mills in England; an engineering workshop and a design consultancy, which also are in in England; associated distribution facilities; and a rail mill in France.
The Reuters news agency reported that Greybull is putting together a US$570 million investment and financing package for the business. Reuters said the agreement is expected to be completed in eight weeks, pending, among other things, a vote by union members.
Officials at the Unite union told The Guardian newspaper that they are being asked to accept a one-year pay cut of 3 percent and changes to their pension plan. The changes to pay and pensions are part of the existing turnaround proposals put in place by Tata before it agreed to the sale, the newspaper said.
If the deal is completed, the business is to be renamed British Steel, which has been out of use for nearly 20 years, according to reports.
On another front, Tata Steel has opened the formal sales process for the rest of its U.K. business, which includes the integrated Port Talbot works, it announced. Tata said it has named KPMG LLP as the advisers to the process.
The law firm Slaughter and May has been named as legal adviser.
“It is the intention of Tata Steel Europe to run a thorough, but expedited sale process by reaching out to a wide universe of potential investors globally,” the company said in a statement.
Tata announced in March that it no longer saw a profitable future for its U.K. business and would look to divest the operation.
