Welsh Government Backs Tata Steel Buyout Bid

A proposed management buyout aimed at saving thousands of Tata Steel (BSE: TATASTEEL.BO - news) jobs has been confirmed.

A new group has been set up, comprising both Tata management and staff, called Excalibur Steel UK Limited.

It (Other OTC: ITGL - news) has formally registered its interest in Tata Steel's UK assets via a "letter of intent".

Its CEO, Stuart Wilkie, said progress had been swift: "It was only two weeks ago we made the decision to pursue a buy-out...

"We believe we have a large number of the pieces in place required to make this a success, including a management team with vast experience of steel making and processing.

"We are confident we can turn the business around and sustain profitable steel-making in the United Kingdom."

It is understood Mr Wilkie's proposal is based around a rescue deal that was rejected by Tata's board in Mumbai last month, calling on interested staff to invest £10,000 each.

Earlier, Wales's First Minister, Carwen Jones, said the Welsh government would offer Excalibur financial assistance.

Mr Jones said he was happy to support "a sustainable worker buy out", and cash had been made available to help Excalibur put its bid together.

"This will enable them to buy specialist advice, technical support and pay the salaries of the team while the sales process progresses," he said.

"We will consider supporting other bids too, should they make a case for it".

Rival Liberty House said it would also be submitting an interest in buying Tata's remaining UK assets ahead of a deadline on Tuesday evening.

Dozens of other "letters of intent" are expected too.

Tata's remaining UK steel operations include the country's biggest steelworks at Port Talbot in south Wales, which employs 4,000 people but is losing £1m a day amid a global steel price crunch - caused by weak demand and over-production.

Thousands of steel jobs have been lost in recent months as the industry buckles under pressure from a flood of cheap Chinese imports.

Liberty, which has already spoken of the possibility of turning Port Talbot into a plant that would create recycled steel via electric arc furnances rather than slab from blast furnaces, was the first company to express an interest in the business after it was put up for sale by its Indian owners in March.

A spokeswoman said today: "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".

Liberty has already agreed to take on two Tata mills in Lanarkshire - announcing plans to reopen them later this year.

The UK Government has confirmed the availability of measures worth hundreds of millions of pounds to support any rescue deal for the rest of the business – which could include taking a stake of up to 25%.

It has also been warned that it needs to act further on cutting energy costs if a successful bidder is to be competitive.

Liberty's executive chairman, Sanjeev Gupta, has said he could walk away from an offer if the price is too high - and stated his company will not take on any plants which will bring sustained losses.

The sale process does not include Tata's Scunthorpe plant which has already been sold in principle to Greybull Capital for £1.

It leaves 11,000 jobs at risk across the rest of Tata's UK steel operations which also include steel-making capability in Rotherham and nine product plants (Other OTC: UBGXF - news) .