Yahoo Finance Celsa Steel gets UK's first Covid-19 corporate bailout
The government has provided an emergency loan to a Cardiff-based steel producer in the first taxpayer-funded bailout under its “Project Birch” scheme for firms struggling during the coronavirus crisis.
Stepping in as the economic fallout intensifies, the government said it was lending to Celsa Steel UK to enable the firm to keep operating, and to secure more than 1,000 jobs at the company, including more than 800 positions at its main sites in South Wales.
The government did not disclose the size of the loan, although media reports have suggested the loan would be worth about £30m.
Forming the first coronavirus bailout deal under the government’s Project Birch emergency plan, ministers said they expected Celsa to repay the money in full, while the company must meet a series of legally-binding conditions.
Following negotiations with the firm, the lending comes with conditions including a commitment to protect jobs, tackling global heating and restraints on executive pay and bonuses, as well as tax obligations. The government said the loan also required further financial commitments from shareholders and existing lenders, although those terms were not spelt out in detail.
The loan to the Cardiff-based subsidiary of Spanish steel firm Celsa Group is believed to be the first deal completed under Project Birch from negotiations with about six companies seeking funding. Those companies reportedly include carmaker Jaguar Land Rover and Tata Steel, operator of the Port Talbot steelworks in Wales.
The chancellor, Rishi Sunak, has previously said that in exceptional circumstances the government would be willing to step in to help firms of strategic importance to the UK, in situations when all other options have been exhausted.
The business department said Celsa was a key supplier to the UK construction industry. “This is a good deal for all parties,” it said in a statement.
Trade unions and campaign groups welcomed the deal and the conditions placed on the lending.
Roy Rickhuss, general secretary of the steelworkers’ trade union Community, said the loan was welcome, but that more needed to be done to support steel firms through the crisis. “Celsa can play an important role in supplying steel for major infrastructure projects but it needs the right environment in which to compete,” he said.
A coalition of organisations, including Greenpeace UK, Tax Justice UK and the High Pay Centre, called on the government to publish full details of the bailout.
In a letter to the prime minister, the charities and lobby groups said future bailouts should also include conditions for companies to tackle global heating and to prioritise job retention, while also forcing firms to stop paying dividends and tackle pay inequality.
Carys Roberts, director of the Institute of Public Policy Research thinktank, said: “We should learn the lessons of the bailouts given to companies in 2008-9, when money was provided without conditions. Companies receiving public funds to support them need to also live up to their public obligations and support jobs and the environment.”
