Tata Steel has agreed to sell part of its British business to distressed debt investment firm Greybull Capital for a nominal £1, as part of a deal that will save more than 4,000 jobs.
The deal comprises a £400m restructuring package for Tata’s Long Products Europe division, that includes its 2,000 acre Scunthorpe plant, which will be renamed British Steel.
The acquisition is expected to complete in eight weeks, although is subject to a ballot of Unite trade union members who will vote on a raft of proposed cost-cutting initiatives.
As part of the deal backed by Greybull, staff at the Scunthorpe plant have been asked to accept a 3% pay cut, as well as reduced pensions contributions. The proposals form part of Greybull’s plan to return the loss-making site to profitability within one-to-two years.
Two mills in Teesside, an engineering workshop in Workington, a design consultancy in York, a mill in Hayange, France, as well as sales and distribution facilities will also be saved in the deal.
The sale brings to an end more than two years of uncertainty for Scunthorpe steelworkers.
Bimlendra Jha, chief executive of Tata’s Long Products Europe business, said: “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.”
Scunthrope MP Nic Dakin welcomed the deal, and responded by posting on his Facebook page: “I welcome today's news that the process of sale of Long Products from Tata to Greybull is reaching a positive conclusion but recognise there is still some work to do to complete the deal. I will be working with everyone to ensure this is positively concluded.”
However, Dakin urged the government to do more to support the British steel industry. He added: “The UK government still needs to do more… It has taken over three years for it to deliver the promised mitigation package on energy costs. Its new procurement rules have still to be tested.”
Tata also confirmed today that it has formally begun the sales process for the rest of its UK business, which includes the Port Talbot plant. Business secretary Sajid Javid is due to update Parliament on the government's progress to help find a buyer.