Talks over £100 million cash boost for Scunthorpe's British Steel
The British Steel works in Scunthorpe could be set to benefit from a major cash boost
By Scunthorpe Telegraph | Posted: 20 Feb 2018
The owners of the Scunthorpe-based British Steel company are looking to invest £100 million in the business in a major boost for the town's 3,000-strong workforce.
The investment would be the biggest since private equity backers Greybull bought the loss-making Tata Steel UK Long Products division in June 2016 for a nominal £1.
The talks with potential new financiers are said to be at a positive stage.
The cash raised would be invested in new coke ovens, upgrading existing mills and other improvements.
Paul Martin, British Steel’s deputy chief executive, said: "The turn-around of our business is on track.
"As we look to build a sustainable future, we’re continuing to make significant investments in manufacturing operations.
"So far we've committed £80 million of capital expenditure, recruited 900 new employees and acquired FNsteel, a premium wire rod business in the Netherlands.
British Steel deputy chief executive Paul Martin
"The scale of our ambition means we’ll continue to invest in our long-term future and we've held positive talks with other potential sources of finance."
Although the proposals are at an early stage, the cash pile will fund investment in the latest hi-tech machinery, including new coke ovens.
Consultants at Alix Partners have been hired to lead the talks with prospective new backers.
Sources close to the company say the overhaul is badly needed after years of neglect at the hands of previous owners Tata Steel and Corus.
British Steel is attempting to close the gap on foreign rivals in France, Germany and Austria, which have been able to pull away from UK steelmakers with generous state support on energy costs and taxes.
More modern technology will enable Scunthorpe steelworkers to produce higher grade, more profitable steel.
It is understood Greybull is in talks with various parties including European banks, specialist debt houses and government-backed funds to raise up to £100 million.