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November, 17th 2019

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MAY 22
11:34

British Steel falls into receivership

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The UK government has confirmed that British Steel is entering into administration, although no formal confirmation has yet been received from the company itself.

The Scunthorpe-headquartered long products specialist has been in discussions with the government about a bail-out loan, said to be of around £30 million ($38m), since early this week. Now the UK Business Secretary Greg Clarke says that talks between the government and the company’s owner Greybull Capital have broken down and arrangements are being made to call in the receivers.

“The government has worked tirelessly with British Steel, its owner Greybull Capital, and lenders to explore all potential options to secure a solution for British Steel. We have shown our willingness to act, having already provided the company with a £120 million bridging facility to enable it to meet its emissions trading compliance costs,” Clarke says.

“The government can only act within the law, which requires any financial support to a steel company to be on a commercial basis. I have been advised that it would be unlawful to provide a guarantee or loan on the terms of any proposals that the company or any other party has made,” the business secretary continues.

The Official Receiver has now been called in.

Trade association UK Steel says that all is not yet lost. ““This news is significant blow for the company, its employees, and the communities across the UK that it supports. British Steel does not sit insolation but is a critical part of the UK’s wider steel sector, a strategic British industry underpinning a myriad of supply chains,“ says association director Gareth Stace in a statement sent to Kallanish.

“Receivership does at least leave options on the table including providing a time to secure a new buyer. All focus now needs to be on securing the future of steel production at the site and avoiding the mistakes seen at Teesside in 2015. We have every confidence that the Government is investigating every available opportunity and pulling out all the stops to ensure a viable solution is found. We stand ready to work with the Government to help it deliver this,” Stace adds.

A source close to the company tells Kallanish that May salaries have been paid and that June salaries have been promised. Staff have been told to carry on as normal, the source says.

The company employed 4,238 people when the last full accounts were filed for the period ending 21 March 2018. A further 20,000 jobs dependant on the company’s business also remain at risk, media reports suggest.