'Brexit issues' see British Steel seek government loan

18 May, 2019, 05:02 | Author: Regina Silva
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Ministers were facing calls last night to protect thousands of jobs after it emerged that British Steel was urgently seeking a loan of up to £75 million.

British Steel employs thousands, mainly at Scunthorpe, but has smaller plants in the North East, and as many as 20,000 are employed indirectly through its supply chain. We are holding constructive discussions with our stakeholders on how to navigate them.

A British Steel spokesman said discussions were continuing with ministers "about a package of additional support to assist the company address broader Brexit-related issues".

The crisis at British Steel comes less than a fortnight after the government provided it with an emergency £120m loan to cover a bill from the European Union for its carbon dioxide emissions.

The Department of Business, Energy and Industrial Strategy said it could not comment on speculation about its role in any rescue talks.

Lenders to British Steel, which include the PNC and ABN Amro banks, are understood to be concerned that orders will remain stagnant until Brexit uncertainty is cleared up, meaning a cash injection is required to support the firm in the meantime.

British Steel has been squeezed in recent months by ongoing Brexit uncertainty weighing on the pound and repercussions of the US-China trade war.

It has also been struggling with the prolonged weakness of sterling since the European Union referendum in June 2016 and the escalating trade US-China trade war.

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The BBC understands that nationalisation or a management buyout are also being discussed as fall-back options.

"This government has a track record of sitting on its hands while United Kingdom manufacturing collapse round its ears", said Ross Murdoch, GMB national officer.

Sir Vince Cable, the Liberal Democrat leader, said: "I personally spent a lot of time as Business Secretary working with British Steel to rebuild its competitiveness".

"Thousands of United Kingdom jobs are on the line, not to mention the entire future of our proud steel industry".

British Steel is owned by investment firm Greybull Capital, who founded the long steel products maker in 2016 after snapping up assets from Tata Steel.

Workers had to take pay cuts and reductions in their pensions in return, and the company recently returned to profit.

Tata said its United Kingdom business would keep running, but admitted it was facing tough operating conditions in the UK.

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