LONDON Metals group Liberty House sparked new hope for Britain's endangered steel industry on Tuesday by announcing the first firm bid for Tata Steel UK, potentially saving thousands of jobs.
Tata Group announced plans to sell its entire UK steel operation in March, leaving the government battling to save an industry that has been hurt by cheap Chinese imports, soaring costs and weak demand.
Keen to avoid the loss of 10,000 jobs, the government has offered hundreds of millions of pounds in support to potential buyers and said it could take a 25 percent stake in the firm.
Liberty's Executive Chairman Sanjeev Gupta was the first businessman to express an interest in Tata's loss-making assets which include the Port Talbot steel plant in Wales, and on Tuesday the firm said it would submit a bid.
"We can confirm that Liberty will submit a letter of intent to Tata Steel today and has put in place a strong internal transaction steering committee and panel of leading external advisers to take the bid forward," a spokeswoman said.
"We hope to make a further short statement later today."
A source close to Tata Steel told Reuters it expected to receive a bid from Liberty, which has done early due diligence on a deal, and that it had not received a bid from any other party.
Indian-born Gupta, who established Liberty House while a student at Cambridge in the early 1990s, has spoken of his desire to invest in Britain's steel industry and return businesses "to their former glory".
He has previously said Port Talbot and its jobs could be saved if the giant blast furnaces were replaced with facilities to process imported slab steel into higher grade product or make steel from scrap metal rather than from iron ore.
Liberty bought former Tata Steel plants in Scotland with government help in March. Scottish authorities had temporarily purchased two mills from Tata before selling them to Liberty.
Another group to emerge as potential buyers for Tata Steel UK has come from Port Talbot itself where a management team have appointed advisers to work on a buyout plan.
The group, Excalibur Steel UK, has named Tata's UK strip products director Stuart Wilkie as chief executive, according to a Companies House filing.
Mark Rhydderch-Roberts, an investment banker, has been appointed as a non-executive director.
"I believe that Excalibur's proposed model of management and employee participation can also potentially provide the foundations of a transformed and profitable business which should be attractive to a wide range of investors and stakeholders," Rhydderch-Roberts said.
Last week, Prime Minister David Cameron visited Port Talbot and said any sale of Tata's British assets would have to cover the whole of the business.
Britain's government has also offered help in lowering the cost of energy for steel works and with workers' pensions to try to save the industry but says its efforts are not linked to the EU referendum on June 23.
Those campaigning to leave the bloc have seized on the crisis, accusing the EU of not doing enough to stop Chinese imports and have blamed the bloc's rules on state aid for preventing government intervention.
(Additional reporting by Krishna Das in New Delhi, writing by Andy Bruce; editing by William Schomberg and Jason Neely)
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Published Date: May 03, 2016 05:21 pm | Updated Date: May 03, 2016 05:21 pm