Tata To Complete £400m Greybull Steel Deal

More than 4,000 steelworkers will have a new employer next week when Tata Steel (BSE: TATASTEEL.BO - news) completes the sale of its European long-products division to a little-known family investment office.

Greybull Capital will announce that it has finalised the takeover of the Tata Steel unit, which employs around 3,000 people at its base in Scunthorpe.

Sources confirmed this weekend that a £400m financing package required to complete the deal was in place – and that it was being provided entirely by private sector institutions, meaning that a mooted Government loan of up to £100m would not be part of the deal.

A statement confirming the change of ownership has been provisionally earmarked for next Wednesday, although the timetable remains subject to change, according to insiders.

The business will be immediately renamed British Steel, and Greybull believes that with a union agreement on pension costs and restructured deals with major suppliers in place, it can be profitable within a year.

The sale of Tata's long-products unit, which manufactures steel for use in the rail and construction industries, will come as the Indian-owned company continues to discuss the disposal of the rest of its British operations with prospective buyers.

A proposal tabled this week by the Business Secretary, Sajid Javid, to restructure the £15bn British Steel pension scheme has triggered fresh speculation that the company may decide to retain its 11 UK steel plants rather than offload them.

The pension proposals, which would cut the benefits paid to thousands of steelworkers and have sparked controversy over the possible precedent set for other struggling companies, are subject to a four-week consultation.

Several bidders remain interested in acquiring the Tata Steel UK operations, although sources suggested that reports in the Indian media that a shortlist of three suitors had been determined were wide of the mark.

The initiation of an auction of its British interests by Tata Steel has plunged the Government into a major industrial crisis, with Mr Javid standing accused of ignoring the steel sector’s plight and then acting in desperation to resolve it.

Labour shadow ministers met Tata Steel executives on Friday to discuss the situation, with Angela Eagle, the shadow business secretary, saying: "Steel can have a bright future if we take the right decisions now.

"We'll keep the pressure up on the Tory Government to do what is necessary to save our steel."

In total, the long products business being acquired by Greybull, initially announced on 11 April, will see 4,800 workers employed by the new British Steel.

The majority are based in Scunthorpe, with the rest split between two mills in Teesside, an engineering workshop in Workington and a design consultancy in York along with a mill in Hayange, France.