LONDON Britain could part-nationalise Tata's UK steel plants by taking a 25 percent equity stake, as part of a support package worth hundreds of millions of pounds designed to attract a buyer and save at least 10,000 jobs.
The Conservative government, which privatised the steel and other industries under former Prime Minister Margaret Thatcher, is seen as being anxious to avoid an imminent closure of Britain's biggest steel works just before a referendum on European Union membership in case of a protest vote.
India's Tata group announced plans to quit its entire British steel operation last month, leaving the government battling to save a once mighty industry that has been hammered by cheap Chinese imports, soaring costs and weak demand.
The government said exactly what support it provided would depend on the purchaser, but that it would be on commercial terms and was most likely to be debt financing. Taking an equity stake was also an option, it said.
"If we were to take an equity stake it would be a minority one with the aim of supporting the purchaser in delivering long term future for the business. We are certainly not seeking to be controlling the company," Prime Minister David Cameron's spokeswoman said.
The Business Ministry said in a statement the government could take a stake of up to 25 percent in the assets.
HEIRS TO THATCHER
Both Cameron and Business Secretary Sajid Javid have pitched themselves as heirs to Thatcher, who during her time in office in 1979-1990 privatised British Steel, acquired in 2007 by Tata, and sold off government stakes in other national champions.
But Cameron, under pressure from trade unions and the opposition Labour Party, fears the prospect of more than 10,000 jobs being lost in the run-up to a June 23 EU referendum.
Eurosceptics have seized on the crisis, saying the EU has not done enough to stop Chinese imports and blaming the bloc's rules on state aid for preventing government intervention.
Labour welcomed the government's announcement as "a step forward" but said more needed to be done.
"This alone will not be enough to save the steel industry. The government must ensure Tata allow enough time for a suitable buyer to be found and they must reassure the customer base and supply chain," said Labour's business spokeswoman Angela Eagle.
"Crucially, they need to address the underlying challenges facing the industry; energy costs, business rates, procurement, and most of all, the illegal dumping of Chinese steel."
The government also said it was working with the pension scheme trustees of Tata Steel and British Steel to reduce the impact on any purchaser, including whether it could separate the scheme from the business.
Greybull Capital, which earlier this month bought Tata's Long Products Europe division in Scunthorpe, northern England, has been reported to be considering making a bid for Tata's speciality steels arm.
Sanjeev Gupta, the boss of metals trader Liberty House Group, has also expressed an interest in Tata's UK assets, while senior staff at Tata's loss-making Port Talbot site in Wales, Britain's biggest steel works, are seeking to launch a management buyout plan.
(Additional reporting by Costas Pitas and William Schomberg, editing by Stephen Addison and Elaine Hardcastle)
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Published Date: Apr 21, 2016 23:30 PM | Updated Date: Apr 21, 2016 23:30 PM