Tata Steel UK Floats Plan for Semi Nationalization
Sky News has learnt that Tata Steel has presented proposals to Whitehall in recent weeks aimed at securing a state injection of close to GBP 1 billion into its UK operations. In return, the company's Indian parent would hand an equity stake of up to 50% to UK taxpayers, amounting to a semi nationalisation of Britain's largest steelmaker as it battles the impact of the coronavirus pandemic. A source close to Tata Steel said the proposal, which is just one of the options the company is examining, would involve its parent company writing off an equivalent quantity of debt owed to it by the UK business. The talks are at a tentative, rather than concrete, stage, and the structure of any deal, as well as the size of any financial contributions, remain far from being finalised.
A spokesperson for Tata Steel Europe said: "We are in active discussions with the UK government on several options for the future of our UK operations, including potential co-operation and participation from the government to create a sustainable decarbonised footprint for the future. Given prevailing market conditions and disruption caused by the COVID-19 pandemic, it is clear that our UK operations face structural challenges that need to be urgently addressed. Discussions with the Government are constructive and ongoing, and at this stage no decisions have been made. It would therefore be inappropriate to comment on unsubstantiated speculation about the outcome of these discussions or the potential impact of any changes to secure our sustainable long-term future. If and when we do have progress to report, we will first inform our employees and consult with our employee representatives."
The discussions between officials and the company form part of Project Birch, the existence of which was revealed by Sky News soon after the UK-wide lockdown sparked chaos for millions of companies in sectors including aviation, hospitality, manufacturing and retail. Since then, the bespoke financial support programme created by the government for companies of strategic national importance has extended only one loan of GBP 30 million to Celsa Steel, a Cardiff-based subsidiary of Spanish steelmaker Celsa which is a major supplier to the UK construction industry. Other steel producers, including British Steel, which is now owned by China's Jingye Group, have also sought financial help from the taxpayer since the beginning of the COVID-19 crisis.
Source : STRATEGIC RESEARCH INSTITUTE