The UK high court on Wednesday ordered British Steel, the UK’s second largest steel producer into compulsory liquidation. A report by S&P Global Platts on Thursday said according to a statement from the government’s Insolvency Service, adding that the company will continue to trade and supply its customers while the Official Receiver considers options for the business.
The development follows the company’s failure to secure emergency government funding. With this, some 5,000 direct jobs and another estimated 20,000 indirect jobs are now at stake. Owned by investment firm Greybull Capital, British Steel, has around 3 million tonne/year of steel capacity across its main site at Scunthorpe in the UK, in France and the Netherlands. Incidentally, Greybull Capital had bought the assets from former owners, Tata Steel for a nominal sum of one GBP in 2016. It was subsequently named as British Steel.
The company had been asking for support from the UK government for the last few weeks and as late as on Tuesday the government had said it would leave “no stone unturned” in its support of the domestic steel industry, the Platts report added.
British Steel confirmed a few days ago that it was in talks with ministers about “a package of additional support,” blaming the situation on uncertainty caused by Brexit. The value of that loan has not been disclosed but the GMB union has said it could be as much as GBP75 million ($96.8 million).
The government had already granted a GBP120 million loan earlier this month to help British Steel cover carbon market costs linked to Brexit.
Source: Economic Times
“This news is a significant blow for the company, its employees, and the communities across the UK that it supports. British Steel does not sit in isolation but is a critical part of the UK’s wider steel sector, a strategic British industry underpinning a myriad of supply chains,” the report quoted Gareth Stace, Director General of UK Steel, an industry association as saying.