Tata Woos Asian Buyers For UK Steel Arm

Tata Steel (BSE: TATASTEEL.BO - news) has drafted in a new team of bankers to sell its loss-making UK business amid frantic efforts by ministers to prevent the closure of one of Britain's biggest manufacturing operations.

Sky News has learnt that the Indian-owned company has in recent days hired Standard Chartered (HKSE: 2888.HK - news) , the London-based lender which focuses on emerging markets, to sound out Asian steelmakers about their interest in the British unit.

While the mandate handed to StanChart (HKSE: 2888-OL.HK - news) , which sponsors Liverpool FC, is global, sources said it was likely to focus on large steel companies in China and elsewhere in Asia.

The bank has strong links to the steel industry as well as a long-standing relationship with Tata Steel's parent company.

StanChart's appointment will see it working alongside KPMG, the professional services firm, which will focus on discussions with financial investors such as specialist turnaround funds.

A 25-slide "summary information memorandum" sent this week to dozens of prospective bidders and seen by Sky News contains a dearth of financial information about the business.

The document reiterates Tata's desire to sell the UK operations - including its site at Port Talbot in Wales - as a single entity, and says it has an annual turnover of roughly £2bn and approximately 11,500 employees.

It (Other OTC: ITGL - news) also outlines the funding structure of the British Steel Pension Scheme, which has around 134,000 members, of whom 16,100 are employee members.

The scheme has a £90m residual deficit on an ongoing basis, with deficit recovery payments planned until March 2018.

Presentations containing additional details about the UK business are expected to be circulated among parties which register credible expressions of interest in the next week.

A turnaround plan drawn up by McKinsey, the management consultants, is understood to project a profitable future for the business despite the cocktail of high energy prices and Chinese steel-dumping which has exerted such a significant toll on Tata Steel UK.

The Government, which has faced intense criticism over its handling of the steel industry crisis, is being advised by EY, while UK Government Investments, which houses the Shareholder Executive, is also actively involved in the search for a buyer, sources said on Friday.

Sajid Javid, the Business Secretary, has said that support is likely to be available to potential buyers , which include Liberty House, the buyer of two of Tata Steel's plants in Scotland.

Earlier this week, Tata Steel agreed a sale of its long products business , which includes its operations in Scunthorpe, to Greybull Capital, a private investment office, for a nominal sum.

That transaction is expected to close within eight weeks, while the company has distanced itself from suggestions that its parent has set an absolute deadline of 28 May to conclude a sale of the remainder of the UK business.

Tata Steel declined to comment and StanChart did not respond to a request for comment.