- Details of the proposed sale are expected to be announced early next week
- The sale involves the European long-products division in Scunthorpe
- Tata Steel UK will sell the business to investment firm Greybull Capitial
- Greybull Capital intend rebranding the rescued business as British Steel
Tata Steel UK will finally sell part of its British business to ‘a family office that makes long term investments in private companies’ early next week.
The deal between the Indian steel firm and Greybull Capital is set to be announced on Wednesday after beginning negotiations late last year.
Greybull has agreed to buy the European long-products division for £400 million, which employs 3,000 people in Scunthorpe.
Several other plants employing a further 1,800 people will be included in the deal.
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Reports claim Tata Steel has agreed to sell the Scunthorpe part of its UK business, pictured, for £400 million
Some 4,000 jobs will be affected by the proposed sale to a ‘family office that makes long term investments’
According to Sky News, the rescued firm will be re-branded British Steel.
The long-products division manufacturers railway lines and goods for the construction industry.
On Thursday, the British government announced it was considering a major overhaul of the deficit-laden British Steel Pension Scheme.
The black hole in the pension scheme was seen as a major hurdle to Tata selling its UK-based assets.
The consultation is looking at separating the pension scheme from Tata Steel and reducing its outgoings, while avoiding a collapse into the Pension Protection Fund (PPF), a government safety net that would leave many pensioners worse off.
Steel industry trade unions said it would be an ‘unmitigated disaster’ if the scheme were allowed to fall into the PPF.
The British Steel Pension Scheme (BSPS) is one of Britain’s largest defined benefit plans, with 130,000 members.
Even with a solvent employer sponsoring it, the scheme’s £14 billion of liabilities exceeds its £13.3 billion pounds in assets.
Britain’s steel industry has been hit by cheap Chinese imports, high energy costs and a global supply glut.
LOCATIONS INVOLVED IN £400M BUYOUT AGREEMENT
Scunthorpe integrated steelworks
Teesside Beam Mill, Lackenby
Special Profiles, Skinningrove
Hayange Rail Mill, north east France
Immingham Bulk Terminal (port terminal)
Engineering workshop, Workington
Design consultancy, York
Associated distribution facilities in the UK and Ireland
India’s Tata said in March it wanted to sell its remaining plants in the country, putting 15,000 jobs at risk and adding to the political pressure to find a rescue plan.
The consultation process concludes on June 23, the date of a politically divisive referendum on Britain’s membership of the European Union.
The government said it was giving consideration to a proposal put forward by the BSPS and supported by Tata.
This would keep the pension scheme intact but require new legislation to allow a reduction in future benefits — an almost impossible task under current regulations.
Allan Johnston, chair of the board of trustees of the BSPS said: ‘Although this would entail future pension increases being cut back from their current levels, benefits would be more generous than those provided by the PPF for the vast majority of scheme members,.’
Its annual increases in pension payments are linked to retail price inflation, but the new legislation would allow the BSPS to benchmark them against consumer price inflation (CPI), which is much lower.
A spokesman for Tata Steel UK said the talks between the company and Greybull Capital were announced late last year, although they could not confirm when a deal will be finalised.
MailOnline has approached Greybull Capital for a comment.
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