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British Steel on the brink with thousands of jobs at risk


British Steel is on the brink of collapse and thousands of jobs are at risk as administrators are expected to be called into the company unless an emergency loan from the government is agreed on Tuesday.

The company, its lenders and Whitehall were preparing for accountancy firm EY to be appointed as administrators as soon as Wednesday in the absence of a deal on Tuesday, according to people briefed on the situation.

One government figure confirmed that the talks were reaching their final stage and a ministerial statement is expected on either Tuesday or Wednesday. Business secretary Greg Clark has come under “huge pressure” to help the company given that British Steel is such an “iconic” employer, the person said.

The company had requested a £75m state bailout to stave off a crisis it blamed on a drop in orders caused by uncertainty over Brexit, just weeks after being awarded a £120m loan on commercial terms from the government to help it meet an EU environmental bill. 

This has thrown into doubt the future of the business, which is the UK’s second-largest steelmaker with a workforce of 5,000 largely based at the vast Scunthorpe plant in North Lincolnshire. 

Talks hit an impasse last week after ministers grew frustrated with the unwillingness of British Steel’s owner, the private equity fund Greybull, to put money on the table, according to several people familiar with the situation. 

The originally requested amount of £75m had fallen to £30m, with the owner and its lenders to inject fresh capital into British Steel, according to Sky News which first reported the preparations for insolvency.

A failure of the company would be a body blow for the UK’s steel industry, which is still recovering from a severe crisis in 2016 that was triggered by a plunge in global prices for the metal. It would also strike at a foundation of the country’s manufacturing base and hurt Prime Minister Theresa May’s “industrial strategy”. 

In addition to its own workforce, British Steel supports an estimated 20,000 jobs among its suppliers and other businesses. 

As negotiations with ministers and civil servants hit a wall last week, the company on Thursday said that it had secured new funding from its lenders but that a “permanent solution” was still needed. 

British Steel was created in 2016 when Greybull acquired what was then the European long products division from the Indian conglomerate Tata, whose British assets include Tetley tea and the carmaker Jaguar Land Rover. 

Greybull paid a token £1 for the lossmaking business and renamed it in honour of the former industrial titan. Following a turnround started under Tata that included mass redundancies and cost cutting, the reborn British Steel returned to profit under its first 100 days of independence. But it has since suffered setbacks and swung into a small loss in 2017-18, the most recent year of available accounts.

The steelmaker initially requested state financial support after Britain’s delayed departure from the EU led Brussels to temporarily suspend the allocation of carbon credits to UK companies. This left it facing a shortfall so the government loaned it £120m so it could purchase the certificates, which are required to cover emissions.

EY and the business department did not respond to requests for comment. British Steel and Greybull declined to comment.



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