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Group planning buyout of Tata Steel's UK assets registers letter of intent

Published 03/05/2016

Commodities trading firm Liberty House said it will put in a formal bid to buy Tata Steel's UK assets
Commodities trading firm Liberty House said it will put in a formal bid to buy Tata Steel's UK assets

The group planning a management buyout of Tata Steel's UK assets has confirmed it has registered a letter of intent expressing its formal interest.

Excalibur Steel UK Limited is the vehicle founded with a view to acquiring Tata Steel Europe, including the huge plant at Port Talbot in south Wales.

Liberty House is also putting in a formal bid to buy the business.

Stuart Wilkie, chief executive of Excalibur and previously the hub director of Tata Steel's Strip Products, UK, said: "This project has made enormous advances in a very short period. It was only two weeks ago we made the decision to pursue a buyout that enables the management and staff to take a stake in the ownership and operation of a strategic British industry.

"We believe we have a large number of the pieces in place required to make this a success, including a management team with vast experience of steel making and processing. We are confident we can turn the business around and sustain profitable steel-making in the United Kingdom, including both the down-stream and up-stream operations."

Liberty House, t he commodities trading firm, headed by Sanjeev Gupta, was first to express an interest after the Indian conglomerate announced the shock decision to dispose of its loss-making UK business.

A spokesman said Liberty was planning to submit a letter of intent to Tata and has put together an internal transaction team and team of external advisers to take the bid forward.

The Government has pledged to support any buyer of the business by buying up to a quarter stake, and making hundreds of millions of pounds of finance available.

Tata has not publicly set a deadline for any deal to be finalised but has made it clear it cannot sustain the £1 million-a-day losses indefinitely.

Alan Hooper, 52, who works in the control room at Port Talbot's Blast Furnace 5, described the events of the past few weeks as tough.

"We've all been a bit nervy," he said.

"I've worked here for over 25 years and there's nowhere else for me to go. There's plenty of others in the same boat as me.

"I'm still optimistic they will find a buyer. We're hard working and highly skilled and make the best steel in the world. That's got to be worth something."

Martin Brunnock, technical director at Port Talbot, said ensuring the works was a money-making operation was a big challenge but an achievable one.

"We've had our bridging plan in place for some time now, which is about hitting specific targets as well as creating value down-stream.

"The plan is working and we are hitting our targets every week and every month.

"I think that can give confidence to prospective buyers.

"Yes the heavy end is important but it's also important for our customers that we have an undisrupted supply chain."

Plaid Cymru shadow finance minister Adam Price said: "An employee and management buyout is the best hope to secure the steel industry's future in the long term and deliver a stable future for the Port Talbot plant.

"I hope that all political parties will get behind this bid now as we fight for the future of this crucial core industry, and fight for Welsh jobs."

Liberty House Group later confirmed it had formally submitted the required letter of intent to Tata Steel Europe containing its indicative bid for the entire issued share capital of Tata Steel UK.

A statement said: "The document, which was sent from Liberty's international headquarters in London, states the company's intention to bid for all of Tata Steel's UK assets, excluding its Long Products division which is in the process of being sold separately, and the Scottish Plate Assets that Liberty already acquired from Tata.

"The bid is based on Liberty's greensteel business model and would involve a transition from steelmaking in blast furnaces to recycling steel in electric arc furnaces over time, while ensuring the company continues to meet key customers' quality requirements. Steelmaking would be ultimately powered by renewable energy sources.

"Liberty believes the UK steel industry can achieve long-term viability if based on an agile, sustainable, non-cyclical model which integrates liquid steel-making from recycling with down-stream production and the manufacture of advanced engineering products.

"In order to take the bid forward Liberty has appointed an internal project team and a panel of leading external advisers to work on this acquisition, dubbed Project Greensteel Pluto.

"The 12-strong team will be led by Liberty executive chairman Sanjeev Gupta, who will be working closely with Jay Hambro, group chief investment officer of the GFG Alliance and chief executive of the Simec Group, and Jon Bolton, chief executive of Liberty Steel UK Plates and UK Steel Development.

"Mr Bolton, former director of Tata Steel, is also chair of the trade body UK Steel and co-chair with Secretary of State Sajid Javid of the UK Steel Council.

"The internal team includes senior executives with extensive experience in the global and UK steel industry, as well as specialists in the legal, environmental, finance and human resource fields. Five of the team have previously worked at senior level within Tata.

"Liberty is being supported by a panel of financial advisers led by international investment bankers Macquarie Capital (Europe) Limited, with the State Bank of India Capital Markets as co-financial advisers. "

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