Turkish investment group buys British Steel

Turkish investment group, Ataer Holdings wins the bid for British Steel. The group, which is owned by Turkey’s military pension fund, took over the UK’s largest steel manufacturing company. The acquisition saved over 5,000 jobs, and the Scunthorpe steelworks, which employs 3,000 people. It also saved another 20,000 supply chain jobs which were put on risk due to failed talks between the government and Greybull (British Steel’s owner), leading to a parliamentary inquiry.

The Business Secretary, Andrea Leadsom, called the takeover an ‘important step’ to save the future of the company.
She said, “The UK has a long and proud history of steel manufacturing and I am committed to a modern and sustainable future for the industry.”

The UK steel maker has been on a look out for a potential buyer since May, when it disclosed bankruptcy, as its request for a state bailout from its private equity owner, Greybull Capital, got rejected.

British Steel landed in the state of insolvency due to delayed Brexit, and the uncertainty around it. Delay in the withdrawal process led to Brussels suspending the carbon credits to the UK companies. It left the company in a £120m government loan to meet an environmental bill. Whereas due to Brexit uncertainty the company’s orders fell and the UK government refused to provide the much-needed emergency funding to it. It led to compulsory liquidation of the UK steel maker. But its business kept on going, with a taxpayer-backed indemnity taking care of its bills and employee wages.

As the government was not able to manage its business, the Official Receiver took care of the operations of the company.

The Official Receiver said that it got ‘several bids’ but opted for Ataer as the ‘preferred buyer’ “Following discussions with a number of potential purchasers for the British Steel group over the past few weeks, I am pleased to say I have now received an acceptable offer from Ataer,” the Official Receiver said, adding that the focus was on closing the deal.

Ataer Holding is a wholly-owned unit of Turkey’s military pension scheme Oyak, which is also the largest shareholder of Erdemir, Turkish steel maker. It makes Ataer the third largest steel producer in Europe. According to people close to the matter, the deal would be closed in coming weeks.

Besides Ataer, the other two potential bidders of British Steel were, Liberty House and Greybull Capital. As per a source who was part of the conference call with the business secretary, Andrea Leadsom said the two were likely to be excluded, as a deal with either ‘would prove to be complicated’.

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