Tata Looking at Offers for U.K. Assets as Bidding Process Ends

Economy In Town At Threat As Tata Steel Ltd. Considers Selling Its U.K. Business

The steel works operated by Tata Steel Ltd. stand in Port Talbot.

Photographer: Chris Ratcliffe/Bloomberg
  • Steelmaker plans to sell U.K. business to reduce liabilities
  • Tata said it’s reviewing all options for U.K. business

Tata Steel Ltd. is evaluating offers for its struggling U.K. assets after the bidding process ended earlier this week.

The company’s directors met in Mumbai Wednesday as the unit of India’s largest conglomerate posted a quarterly loss amid a writedown at its European business. The bidding process closed Monday and the firm hasn’t yet shortlisted any bidder, Chief Financial Officer Koushik Chatterjee said yesterday.

The U.K. steel industry has been hit by high energy costs, inefficient output and a flood of cheap Chinese exports. Tata Steel said in March that after years of losses it planned to sell its U.K. operations, including the Port Talbot plant in South Wales, putting 15,000 jobs at risk and raising the alarm for British politicians. The company said this month it was bringing forward seven expressions of interest for the assets.

"The Tata Steel Europe board, under the advice of the Tata Steel board, is actively reviewing all options for the Tata Steel U.K. business including a potential sale," Tata said in an earnings statement Wednesday.

Liberty House Group, Hebei Iron & Steel Group, JSW Steel Ltd. and Excalibur Steel, a buyout team led by a Tata executive, have studied buying the assets, people familiar with the matter, who asked not to be identified because the deliberations are private, said this month. Other bidders include Greybull Capital LLP, U.S. steel giant Nucor Corp. and Leeds, England-based fund Endless, the Sunday Times has reported.

Government Support

The U.K. government has offered “hundreds of millions of pounds” of financial support as an incentive to a potential buyer and the state would also consider taking a stake of as much as 25 percent. Bidders don’t want to be saddled with pension liabilities and Tata may move the pension assets to an insurance company, according to people with knowledge of the matter, who asked not to be identified.

Tata Steel is considering keeping the U.K. business and is evaluating its performance and the financial support the government has offered, even as it works on a sale, the Guardian newspaper reported, citing unidentified people close to the company.

A spokesman for Tata Steel said the company couldn’t comment beyond what Chatterjee said on Wednesday.

The steelmaker reported a net loss of 32.1 billion rupees ($477 million) in the three months to March 31. The loss included an exceptional item of 28.6 billion rupees on account of a non-cash writedown of fixed assets and restructuring linked to its European operations, it said.

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