October 23, 2019 / 2:14 PM / 21 days ago

Deal to save British Steel in doubt as talks with Turkish fund near deadline

LONDON (Reuters) - A deal to save Britain’s second largest steelmaker British Steel from collapse is in jeopardy as exclusive negotiations with Turkey’s military pension fund OYAK approach a deadline without an agreement.

FILE PHOTO: A general view shows the British Steel works in Scunthorpe, Britain, May 21, 2019. REUTERS/Scott Heppell - RC180C44C550/File Photo

OYAK’s affiliate Ataer Holdings was granted a 10-week exclusivity period to take over British Steel, which went into liquidation on May 22, ending on Thursday.

Britain is now looking to resume talks with other interested parties, the Official Receiver said on Wednesday.

Two sources with knowledge of the matter said that India’s JSW Group (JSTL.NS) and Sanjeev Gupta’s GFG Alliance, which had expressed an interest after the steel producer was put into compulsory liquidation, will likely return to bid.

JSW and GFG Alliance were not immediately available to comment.

“While discussions with Ataer are continuing, discussions with other parties who have expressed continued and renewed interest in acquiring the whole British Steel business will now be possible,” the Official Receiver said.

“Ataer remain very much interested in acquiring the business and we remain in detailed discussions with them to conclude a sale,” it added.

British Steel produces high-margin, long steel products used in construction and rail networks. It has a series of contracts to supply steel rails to customers in Britain, Italy, Spain, Belgium and other European countries, as well as a 60,000 tonne a year supply contract with digger maker Caterpillar.

It sources iron ore and coal, essential primary materials in the making of steel products, from several countries including Australia, Brazil and Argentina.

Its closure would impact 5,000 jobs in Scunthorpe, northern England, and a further 20,000 jobs in the supply chain.

The European steel industry as a whole says it faces a crisis as U.S. imports tariffs are pushing extra volumes of steel into Europe.

On top of that, steelmakers in Britain pay some of the highest green taxes and energy costs in the world, and face high labor costs and business rates.

Reporting by Clara Denina; Editing by Alexandra Hudson

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