Tuesday, April 19, 2016

News: Greybull eyes Rotherham steel plant - reports

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Greybull Capital, the investor close to finalising the purchase of Tata Steel's site in Scunthorpe, is also assessing sites in Rotherham and Stocksbridge - according to reports in a national newspaper.

The Indian-owned steelmaker recently concluded that it is exploring all options for portfolio restructuring including the potential sale of Tata Steel UK, in whole or in parts. As the Government makes efforts to help create a long term future for UK steel, Anna Soubry MP visited Aldwarke in Rotherham following the announcement and left knowing that there is a future for steelworks in South Yorkshire.

Following months of discussions over the future of the Scunthorpe site, Tata Steel last week announced the conditional sale for a nominal consideration of its Long Products Europe business which employs 4,400 in the UK. The sale would be in exchange for Greybull Capital taking on the whole of the business, including assets and relevant liabilities, and securing an appropriate funding package (thought to be worth some £400m).

Now, The Financial Times is reporting that representatives of Greybull visited Rotherham last week, showing an interest in the Tata's Speciality Steels business.

The Government and unions are pressing Tata to be a "responsible seller" and would much prefer their UK operations to be sold together, incorporating the loss-making blast furnace operations at Port Talbot.

Greybull is a family investment office with significant investments in various sectors including aviation, pharmaceuticals, semiconductors, energy, industrials, retail and leisure across UK, mainland Europe and the US. Within its UK portfolio Greybull owns and controls several companies including The Monarch Group, My Local, Plessey Semiconductors Limited and Arc Specialist Engineering Limited.

Neither Tata or Greybull have commented on the FT's article.

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The Speciality Steels business sees steel manufactured from high quality scrap at the Rotherham site using the more modern Electric Arc Furnace (EAF) method before undergoing further refining at the Stocksbridge plant or the Thrybergh Bar Mill to improve the quality. Stocksbridge has a multimillion pound Vacuum Induction Melting (VIM) furnace which turns high-purity recycled steel and alloys into purified liquid steel used in the aerospace sector.

Speciality Steels produces around 225,000 tonnes of steel, comprising around 3% of Tata Steel Europe's total output, and £275m of turnover. It is Tata Steel Europe's only Electric Arc Furnace based business.

Investment in 2005 saw the Rotherham site at Aldwarke become the focus for steel making, casting and rolling of specialist steels. Restructuring in 2012 saw the Bar business integrated into its Speciality Steels business when Tata Steel announced job losses and investment of a further £2.75m in Rotherham.

In July last year, proposals for the next stage in Tata's plans to refocus its speciality and bar business on high-value markets such as aerospace were announced which included changes that has resulted in a reduction in employee numbers, mainly at its Rotherham-based bar business. Around 500 jobs of the 2,000 in South Yorkshire were at risk.

Tata Steel confirmed yesterday that Bimlendra Jha, the man who led the divestment process that resulted in the signing of a Sale and Purchase Agreement with Greybull Capital, has been appointed as the CEO of Tata Steel UK.

The firm also said that as the official sale process gets underway: "the advisers to Tata Steel Europe have begun initial exploration of interest in Tata Steel's UK operations reaching out to 190 potential financial and industrial investors worldwide. More detailed information sharing will commence this week as the process moves into the confidential phase."

Tata has also appointed Standard Chartered bank as an additional adviser to the process to ensure the coverage and reach of the universe of potential buyers, especially to Asia and the Far East.

No timescale has been confirmed, but some opposition MP's have stated that four months could be available for buyers to be found.

Tata Steel Europe website

Images: Tata Steel

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