Tata Steel in talks with investment firm over Long Products business
Tata Steel has signed a Letter of Intent with Greybull Capital for the potential sale of its Long Products business.
Tata said the move will lead to exclusive negotiations with the investment firm and covers several UK-based assets including the Scunthorpe steelworks, mills in Teesside and northern France, an engineering workshop in Workington, and a design consultancy in York.
It also includes Tata Steel's Scottish mills in Dalzell and Clydebridge which are currently being mothballed.
Unions welcomed the announcement, following a spate of job losses in the steel industry and fears for the future of Tata's Long Products business.
Karl Koehler, chief executive of Tata Steel's European operations, said: "This is an extremely critical time for the whole industry, and we have been working hard to explore all options that could provide a future for the Long Products Europe business.
"We will now move into detailed negotiations with Greybull Capital. It is too early to give any certainty about the potential outcome of these discussions.
"We will continue to work closely with our trade unions and works councils and will communicate any relevant news to employees on an ongoing basis.
"In the meantime, Tata Steel and our Long Products Europe business will continue to work closely with customers to deliver high-quality products."
Bimlendra Jha, executive chairman of the Long Products Europe business, said: "Today's announcement is the result of the huge effort put in by employees, trade unions and management to seek a future for the Long Products Europe business by creating a turnaround plan.
"The development of this plan, in co-operation with customers, suppliers and government, has enabled us to reach this stage, though much work remains to be done to reach a successful outcome."
About 4,700 people are employed at Long Products Europe and its distribution facilities.
Tata Steel Europe employs around 30,000 people across Europe, including about 17,000 in the UK.
Greybull said in a brief statement: "Greybull Capital LLP confirms that it has signed a Letter of Intent with Tata Steel to enter exclusive discussions on the possible acquisition of the Long Products Europe business based in Scunthorpe, North Lincolnshire.
"Whilst this is an important milestone, much work remains to be done to reach a successful outcome."
Roy Rickhuss, general secretary of the Community steelworkers' union, said: "We welcome the interest from Greybull in giving Long Products a future outside Tata Steel. Of course the devil will be in the detail of the deal and we will be seeking further discussions with both Tata Steel and Greybull to fully understand their intentions and the implications for steelworkers.
"We welcome any credible investor who has a vision for a sustainable business and is prepared to invest for the future. It's this sort of long-term commitment that will give the unions and the workforce the confidence that they want to make a success of the business and secure steel jobs at the Long Products sites.
"There is a highly skilled and experienced workforce within Long Products, who have consistently delivered in the face of a difficult global market. The steelworkers are the bedrock of the business and are an asset to any investor.
"Now we want to see all stakeholders, particularly the Government, fully focused on establishing a sustainable future for the Long Products business so it can continue to fill its role as a vital foundation industry that produces world-class steel and has provided secure employment for generations."
"It is also clear from today's announcement that any future for the Dalzell and Clydebridge mills in Scotland will be with a different investor. Again, this should bring renewed focus to the work of the Scottish Government's Task Force in ensuring that the skills and assets are preserved and a buyer is found."
David Hulse, national officer of the GMB union, said: "GMB see this news as a welcome development. The next step is the due dillegence process and we expect local GMB representatives to be fully involved.
"This is an exceptionally challenging time for the UK steel industry. It is essential that the UK Government plays a full part in securing a level playing field to enable this essential industry to survive and thrive."
Unite national officer Harish Patel said: "We welcome the announcement today for the 5,000 workers whose jobs are still under threat in the long products division. This is good pre-Christmas news for the various sites, including at Scunthorpe.
"However, there is a lot of work to be done in formulating the details and the future business plan. We will need to consider whether jobs are safe with this potential sale, the impact on the supply chain, and will the current terms and conditions for the workforce be affected.
"Ministers also need to realise that the matter does not end here - the industry is still in crisis."
Greybull Capital LLP says it is a family office that makes long-term investments in private companies.
"We have a broad portfolio spanning investments in the energy, technology, retail, industrial and manufacturing sectors in both Europe and the United States.
"Greybull focuses on backing management teams with opportunities in early stage, growth, and mature companies. Through investment and innovation Greybull aims to help create growing and profitable enterprises," it says.
Greybull Capital bought a majority stake in low-cost airline Monarch in 2014.
Staff agreed to redundancies and pay cuts as part of a deal to save the Luton-based firm, with Greybull Capital pumping £125 million into Monarch.
Shadow business secretary Angela Eagle said: "This is a potentially positive step towards ending the uncertainty that has hung over the Long Products business and the communities in Scunthorpe and Teesside for so long.
"As negotiations begin it's important that both sides continue to work closely with trade unions, works councils and with employees to ensure that any potential deal is based on a long-term and sustainable vision for the business."