November 11, 2019 @ 15:10 by Steven Hugill
A takeover deal for a troubled steel operator employing hundreds of North East workers has been agreed.
China’s Jingye Group has entered into a sales contract for British Steel.
The operator has pledged to invest £1.2 billion in the business, adding it will seek to “preserve thousands of jobs in a key foundation industry for the UK.”
The value of the deal for British Steel, which employs around 800 staff across its Teesside Beam Mill, near Redcar, its special profiles factory, in Skinningrove, east Cleveland, and an associated site in Blaydon, has not been disclosed.
However, officials have confirmed the agreement includes the business and assets of British Steel Limited – including its Scunthorpe steelworks and UK mills – and shares of FN Steel BV, British Steel France Rail SAS and TSP Engineering.
It also includes shares owned by BSL in Redcar Bulk Terminal Limited.
A Government-appointed official receiver, who has been overseeing British Steel since its collapse into compulsory liquidation earlier this year, said completion of Jingye’s contract is conditional on a number of matters, including gaining necessary regulatory approvals.
He added all parties are working together to conclude a sale as soon as reasonably practicable, confirming the business will continue to trade as normal during the period between exchange and completion.
Reacting to the news, Secretary of State for Business, Energy and Industrial Strategy Andrea Leadsom said she was “delighted” with the deal, adding she will meet the official receiver today (Monday, November 11) to further discuss the plans for British Steel’s future.
She said: “It is a really positive step forward to secure jobs.
“I’m feeling very optimistic – the deal is not finalised yet but it is really good news.”
Chris McDonald, chief executive at the Middlesbrough-based Materials Processing Institute, which oversees research and innovation across the global steel and materials sectors, said the deal would be a “huge relief” for workers and their families, as well as those employed in the supply chain.
He also said he was buoyed by Jingye’s commitment to fresh investment at British Steel, along with its targeting of increased production.
He said: “This ensures this vital aspect of UK industrial infrastructure, on which we all rely for our rail, construction and engineering industries, will continue.
“The purchase of British Steel makes sense for Jingye as it extends its capabilities into rails and girders, as well as giving it a presence in the UK and Europe.
“Innovation will be essential to achieving this and, as a long-term partner, the Materials Processing Institute stands ready to develop and deploy the new technologies that will be essential for the future success of British Steel.”
Ataer Holdings, a steelmaking subsidiary of the Turkish military pension fund, had been in exclusive discussions for British Steel but they ended in October, paving the way for other interested parties to step in.
British Steel was founded out of Tata Steel’s Long Products division when former owner, the investor Greybull Capital, paid India’s Tata a nominal £1 for the operation.