British Steel on verge of £50m buyout by Chinese firm

11 November 2019, 06:43

The Scunthorpe plant employs thousands of people
The Scunthorpe plant employs thousands of people. Picture: PA
EJ Ward

By EJ Ward

Chinese industrial giant Jingye Group says it will invest £1.2 billion in British Steel after finalising a deal to buy the UK company.

The Chinese firm hope to save as many of the current 4,000 jobs in Scunthorpe and Teesside as possible.

Talks with a Turkish buyer have collapsed and now the Jingye Group has become the leading contender with a buyout bid of £50m.

Staff at the Scunthorpe plant have been told in an email that the deal is going ahead and contracts have been exchanged.

The deal could be announced by the Official Receiver as early as Monday.

It has been reported that the Government will help in the form of loan guarantees and other financial support.

British Steel went into liquidation in May and has been kept running by the Government since.

According to the Official Receiver, completion of the contract is "conditional on a number of matters, including gaining the necessary regulatory approvals."

"The parties are working together to conclude a sale as soon as reasonably practicable," it said.

Jingye is also set to sweeten the offer with the promise it can also access up to £300 million in loans, indemnities and grants to back its plan to boost production at the plant by 10%.

The news comes after talks stalled between the steelmaker and Ataer. The Turkish firm is said to have fallen to third place in the bidding, also behind steel baron Sanjeev Gupta, who owns the UK-based Liberty House group.

A spokesperson for steelworkers’ union Community said: “If this [the sale] is confirmed, then we welcome this positive step towards securing British Steel under new ownership.

“The fact that there has been ongoing interest from both Ataer and now Jingye, rightly demonstrates that potential buyers believe that British Steel can have a sustainable future.

“Any new owner would not just be acquiring a steel business, they would be taking on a dedicated and skilled workforce, who even through the uncertainty of recent months have been breaking production records to give the business a chance.”

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