The team searching for a buyer for British Steel is expecting about 10 bids with only days to go before a deadline for offers for the stricken company, according to people briefed on the matter.
The UK’s second-largest steelmaker collapsed into insolvency in May after the government rejected its plea for an emergency £30m loan, throwing into jeopardy some 5,000 jobs directly — and many more among suppliers.
Prospective investors that have run the rule over parts or all of the business include Evraz, the Russian steel and mining company; Liberty House, the industrial conglomerate led by Sanjeev Gupta; Indian steel company JSW; and Greybull Capital, the buyout group under whose ownership British Steel collapsed.
Chinese steelmaker Baowu has also taken a look, according to a person close to the sales process. It did not respond to requests for comment.
Ahead of Sunday’s deadline, the accountancy firm running the sales process, EY, has privately said it is anticipating bids in the low double-digits, said two people familiar with the process.
There has been interest in some of British Steel’s smaller factories, which process the basic material into value-added products. But it is unclear how many offers will land for the entire company as a going concern, given the short timeframe, its stressed situation and the complexity of the business.
Despite the original deadline being pushed back more than two weeks, some interested parties feel this does not give enough time and so may not submit offers, participants told the FT.
“We can’t respond by that deadline. Any other organisation whose technical due diligence staff is based overseas would find it hard,” said one.
Another issue is the ongoing confusion over Brexit. “There’s still no clarity on what happens on October 31,” said another person close to the process. “Anyone taking on that business will face the situation of ‘What’s our route to market?’”
British Steel has been hit by the weak pound, rising raw material costs and uncertainty over Britain’s departure from the EU, which it blamed for a slump in orders.
It entered compulsory liquidation after the government declined its plea for a second state bailout in short succession.
The company’s main division, based at the giant Scunthorpe works in Lincolnshire, is under the control of the official receiver, a court-appointed civil servant who is overseeing day-to-day operations and ensuring bills and wages are paid.
Its smaller sites include a rail factory in France, which has been eyed up by Evraz, according to people close to the process.
Greybull is also considering a bid for the French mill as well as the company’s Dutch subsidiary, FN Steel. An approach for them is likely to come through a French steel producer called Ascoval which the investment firm recently acquired, said a person aware of the situation.
However, there may be political opposition to Greybull picking up assets from British Steel, given it faced criticism for extracting management fees from the company.
Other sites include two rolling mills in the north-east of England: the Skinningrove plant, which supplies the digger maker Caterpillar, and the Lackenby works on Teesside that makes beams for construction.
British Steel’s infrastructure design consultancy, TSP Projects, has also drawn interest, according to Sky News.
Liberty House, which has been on an acquisitions spree around the world, said British Steel in its current form did not fit with its strategy. But “the door is not completely closed”, said one person.
Trade unions say keeping the business together is critical to ensure its survival and safeguard jobs in an industry plagued by oversupply.
This is also the priority for ministers, said a person recently briefed by civil servants. The government is underwriting the costs of the liquidation.
Selling assets off piecemeal could be the death knell for the raw steelmaking facilities at Scunthorpe, which feed the smaller sister plants.
However, there is scepticism among industry figures about whether the Lincolnshire site can survive in its current configuration.
The plant is one of the UK’s last two remaining integrated steelworks, which produce molten metal from raw materials in large blast furnaces.
Other options include going down to one blast furnace in order to concentrate on profitable products, or even closing the furnaces altogether, which would entail massive job losses, and importing basic material.
“Whilst it’s politically difficult, you would at least end up saving part of the business rather than lose all of it,” said Andrzej Kotas at Metals Consulting International.
