Tata Steel UK's strips unit staff eyes buyout

Tata is looking for support from UK govt in terms of commercial rights and bank guarantees just as in the Greybull deal

The management of the UK strips division of Tata Steel, has expressed interest in buying out the group’s five-million-tonne unit, persons close to the development told Business Standard on Wednesday. The division is headed by managing director Stuart Wilkie.

Alongside, Tata Steel has made a memorandum of sale available for parties interested in buying its UK business.

“Tata Steel is looking for a consortium that can hold its UK business comprising the management of the UK strips business and an outside party,” a source said.

“Tata is also looking for support from the UK government in terms of commercial rights and bank guarantees just as in the Greybull deal,” he added.

Tata Steel UK’s Port Talbot strips plant comprises a blast furnace and strips facility, and the Scunthorpe facility has a blast furnace and a 4.5 million tonne long products unit. The strips division employs around 4,000 people.

Tata Steel Europe on Wednesday said it welcomed credible expressions of interest for Tata Steel’s UK operations. “It is our policy that we are not naming, confirming or commenting on any potentially interested investor or bidder at this point,” it said. However, all expressions of interest, including any management buyout proposals, will be considered when received, it added.

Last week, Tata Steel had announced an agreement to sell its long products Europe business to investment firm Greybull.

The long products Europe business employs 4,800 people, 4,400 in the UK and 400 in France.

Wilkie had proposed a turnaround plan for the strips plant earlier this year to the Tata management, which was rejected by the Tata board in March.

The long products division sale to Greybull covered several UK-based assets, including the Scunthorpe Steelworks, two mills in Teesside, an engineering workshop in Workington, a design consultancy in York, and associated distribution facilities as well as a mill in northern France.

Tata Steel’s UK business, including the one sold to Greybull, has been running in losses for the last couple of years. Tata Steel has been looking to sell 10-million-plus tonne steel-making capacity that has a huge pension liability with 146,000 retired and active employees.

Tata Steel had acquired Corus in 2007 for $12.9 billion. The company is neither able to get this bleeding unit off its back nor is it able to turn it around.

"In the interests of all stakeholders every credible expressions of interest will enter the same rigorous assessment process to ensure the best value and prospects of sustainability," the company said.
HOW IT ALL BEGAN

• FY08: Corus financials were included in Tata Steel UK
   
• FY11: Sale of Teesside Cast Products in north England for $469 million
   
• FY12: Entire stake sale of 26.27% in Riversdale Mining (coal) for Aus $1.06 billion
   
• FY13: Took impairment charge of Rs 8,356 crore, mainly on European operations
   
• FY15: Took impairment of Rs 6,528 crore
   
• FY17: Sold 4.5 million-tonne long-product division to Greybull Capital (in April)