The Tata Group had acquired its United Kingdom steel operations as part of a 6.7 billion pounds acquisition from Anglo-Dutch steelmaker Corus in 2009.
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Tata UK executive Stuart Wilkie, who is leading Excalibur’s bid, is using a revised version of a previously rejected turnaround plan to buy the business which employs 11,000 people now, including 4,000 at the sprawling Port Talbot works in south Wales.
The Government has admitted that the issue of pension liabilities, believed to run into hundreds of millions of pounds, is a potential stumbling block to any deal.
Excalibur and Sanjeev Gupta’s metals group Liberty House both submitted letters of intent to buy Tata’s United Kingdom operations this week.
One of the potential buyers of Tata Steel – the management team – says it could cut up to 1,000 jobs if it succeeds in buying the plants.
Wilkie added that efficiencies achieved since a year ago, when the company was losing about £1m a day had reduced losses to a quarter of those levels.
THE Government is “talking intensively” with Tata Steel during the sale of its United Kingdom assets – including its plants in Llanwern and Port Talbot – David Cameron has said.
Excalibur Steel UK, the company proposing a management buyout of Tata Steel UK, has said the takeover could lead to more job losses.
Liberty’s executive chairman Gupta said, “The conclusions of the Cambridge team match our own industry analysis and our green steel strategy very closely and we believe their work will be hugely valuable to us in developing and refining our business model for the sector”.
High-cost European steel plants are unable to compete with China’s modern factories, and the new blast furnaces that India plans to set up.
Roy Rickhuss, general secretary of Community, said: “Since Tata put the business up for sale we have had various discussions with a range of stakeholders who are keen to understand the perspective of the workforce”. Liberty House specialises in recycling steel rather than making it from raw materials.
The buyout group wants 10 percent of the total funding to come from employees of Tata Steel, and expects the British government to cough up 25 percent of the overall cost, something the government has said it would do.
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Tata’s sizeable pension obligations would be a sticking point for anyone wanting to take on the business.
