UK government may buy 25% equity stake in Tata Steel to support sale: Reports

MUMBAI: The UK government is ready to take a minority stake of as much as 25% in Tata Steel's UK business to support the sale and offer hundreds of millions of pounds in debt relief, as it makes an urgent bid to stop the Britain's largest steelmaker from shutting down.

The announcement is the latest in the string of actions taken by the UK government to salvage thousands of jobs after Tata Steel put its entire UK operations on the block, giving up on efforts to revive the business it bought as part of the takeover of Corus at the peak of commodity boom in 2007. The company has suffered almost a decade of losses amid poor demand and cheap Chinese imports.

Tata Steel has made it clear that it wants to complete the sale process in a 'time-bound' manner given the severity of the funding requirement in the foreseeable future.


Ministers unveiled their proposals for a package of support after Business Secretary Sajid Javid said last week that the government was prepared to “co-invest” in British steel. The offer has been made by the UK and Welsh governments and will be made available on commercial terms to potential buyers of Tata Steel.

"This government is committed to supporting the steel industry to secure a long-term viable future and we are working closely with Tata Steel UK on its process to find a credible buyer. The detail of our commercial funding offer is clear evidence of the extent of that commitment," Javid said in a press release on Thursday.

Outlining its package, the Department for Business, Innovation and Skills said the financial support package will be tailored to the purchaser’s strategy and financing needs. However, it is expected that all, or the large majority, will be through the provision of debt financing.

The government is also open to providing hybrid (convertible debt) or alternative forms of financing. It clarified that the government will not acquire a material element of control over the business.

In addition to the support package, the UK and Welsh governments will also be willing to consider additional grant funding support, for example to support the development of power plant infrastructure, energy efficiency and/or environmental protection measures, research & development, and training.

Tata Steel sold its long products business to Greybull Capital last week for 1 pound on the same day. It is now left with strip business in Port Talbot and related rolling mills. Until now Sanjeev Gupta's Liberty House and Port Talbot management have shown interest in Port Talbot assets. The company has reached out to 190 potential financial and industrial investors for the sale.

The UK government is also working on the Tata Steel and the British Steel Pension Scheme’s Trustees to find a solution that will help minimise its impact on a potential purchaser, and potentially separate it from the business.

Tata Steel UK's has a 15 billion pounds commitment to 135,000 current and former steelworkers, which has been putting off potential buyers.