British Steel seeks government loan for ‘Brexit issues’
Image copyright British Steel British Steel has said it is seeking further financial support from the government to help it address “Brexit-related issues”.
It follows reports the company needs a loan of up to £75m to keep trading in the coming months.
The UK’s second largest steel firm employs 4,500 people, and about 20,000 indirectly via its supply chain.
The company said “uncertainties around Brexit are posing challenges for all businesses including British Steel”.
It added: “We are holding constructive discussions with our stakeholders on how to navigate them.
“Discussions are continuing about a package of additional support to assist the company address broader Brexit-related issues, whilst continuing with [the company’s] investment plans.”
A spokesperson for the the Department for Business, Energy and Industry Strategy said: “As this is speculation, we won’t be commenting.”
British Steel’s main plant is at Scunthorpe, but it also has sites in Teesside, Cumbria and North Yorkshire.
The move comes just two weeks after British Steel secured a £100m loan from the government to pay its EU carbon bill.
The money meant the private equity-owned firm could avoid a steep EU fine.
According to Sky News, in recent days the steel maker has met its lenders and the government to discuss another loan.
British Steel has reportedly faced a slump in orders from European customers due to uncertainty over the Brexit process.
It has also been struggling with the prolonged weakness of sterling since the EU referendum in June 2016 and the escalating trade US-China trade war.
Quoting people close to the process, Sky said insolvency experts have been placed on standby in case British Steel cannot secure the funds it needs.
The BBC understands that nationalisation or a management buyout are also being discussed as fall-back options.
‘Time for action’
The GMB union called on the government to guarantee the future of the firm and safeguard thousands of jobs.
“This government has a track record of sitting on its hands while UK manufacturing collapse round its ears,” said Ross Murdoch, GMB national officer.
“Now is the time to take action – ministers must come out and guarantee the loan required to safeguard British Steel.”
Private equity firm Greybull Capital rescued Tata Steel’s long products business – which makes steel for the rail and construction sectors – during the depths of the steel crisis in 2016, saving more than 4,000 jobs.
It paid a nominal £1 fee for the assets, but pledged to plough up to £400m into the business, which it rebranded British Steel.
Workers had to take pay cuts and reductions in their pensions in return, and the company recently returned to profit.
The news comes days after Tata signalled its planned merger with German rival Thyssenkrupp was off, raising fresh doubts about its Port Talbot site.
Tata said its UK business would keep running, but admitted it was facing tough operating conditions in the UK.
About The Author
