Tycoon Gupta renews talks on bid for loss-making British Steel
21 October 2019, 16:32 | Updated: 21 October 2019, 20:57
The industrials tycoon Sanjeev Gupta has reignited talks with the government about a takeover of British Steel amid mounting concerns over the prospects for a deal financed by Turkey’s military pension fund.
Sky News has learnt that Mr Gupta's Liberty House Group, which is part of his family holding company GFG Alliance, has in recent days held fresh talks about buying the UK's second-biggest steel producer.
Sources said the discussions had accelerated ahead of the expiry later this week of an exclusivity period granted by the Official Receiver (OR) to Ataer Holding, a subsidiary of Turkey's Oyak.
The intervention of Mr Gupta's company underscores the ongoing uncertainty about the future ownership of British Steel, which collapsed into compulsory liquidation in May.
The OR has been attempting to finalise a deal for the loss-making company since then, and in August granted Ataer a ten-week window within which it would not talk to other prospective buyers.
That restriction did not, however, apply to the Department for Business, Energy and Industrial Strategy (BEIS).
Earlier this month, Sky News revealed that Jingye, a Chinese steelmaker, had approached the government to express a renewed interest in buying the Scunthorpe-based company.
British Steel directly employs more than 4000 people, with up to 20,000 more jobs in its supply chain relying on its survival.
The company is estimated to be losing around £5m every week, with the OR responsible for deciding how long to continue using taxpayers' money to fund those losses.
Both Jingye and Liberty House were among the parties which held talks about a deal prior to the decision to name Ataer as the preferred bidder.
The re-emergence of Liberty House Group as a potential buyer may provide some reassurance that a deal can still be struck to save British Steel.
However, Mr Gupta's company has also faced searching questions about its financing and corporate governance following a string of large European steel takeover deals.
Sources close to the situation confirmed that Liberty House and the government were in "active" talks, although they declined to provide an assessment of how likely a deal might be if the OR resumes talks with bidders other than Ataer.
The expiry of the exclusivity period with Ataer should not signal that the Turkish bid is dead, according to insiders, although the country's military incursion in Syria has "complicated" its interest in British Steel.
Ongoing uncertainty about the terms of the UK's departure from the European Union have also made a deal more difficult to finalise, and it remains possible that Ataer would seek to quickly conclude a transaction if prime minister Boris Johnson's Brexit deal is approved by MPs this week.
Ataer has offered a headline price of between £60m and £70m to take control of British Steel, and has negotiated a government support package worth about £300m.
The business department did not respond to calls about the renewed talks with Liberty House but said earlier this month: "In August, the Official Receiver confirmed a period of exclusivity with Ataer Holdings to purchase the entire business and assets of British Steel and work is continuing to finalise the details.
"The government continues to meet with a wide range of businesses as a matter of course."
A rescue of British Steel would be viewed as an important sign of the government's commitment to steel manufacturing in the UK, which has slumped over recent decades.
The company, which was previously a subsidiary of the Indian conglomerate Tata, has flirted with insolvency on previous occasions as the economics of steel production in the UK have become less attractive.
British Steel fell into insolvency in May after the government decided against providing £30m to the company under its then-owner, Greybull Capital.
That came just weeks after Greg Clark, Andrea Leadsom's predecessor as business secretary, agreed to provide an emergency £120m loan to cover the cost of an EU carbon credits scheme for industrial polluters.
Both Liberty House and the Official Receiver declined to comment on Monday.
(c) Sky News 2019: Tycoon Gupta renews talks on bid for loss-making British Steel