Tata Steel Said to Mull Loan to Help Greybull Buy U.K. Unit

  • Tata Steel said to consider as much as $400 million loan
  • Steelmaker in talks to sell European business since December

Tata Steel Ltd., which is trying to sell its European long-products steel business to Greybull Capital LLP, is in talks to provide a working capital loan of as much as $400 million to the private equity firm to help seal the deal, people with knowledge of the matter said.

The two companies, which entered into exclusive talks for the sale in December, have assured trade unions that employees will not be laid off at the plants, one of the people said, asking not be identified because the discussions are private. The agreement covers Tata Steel’s Scunthorpe steelworks in England, as well as mills in Teesside and northern France.

Tata Steel wants to sell its U.K. operations amid a collapse in prices of the alloy as Chinese demand slows for the first time in a generation, spurring local mills to flood markets with record exports. Klesch Group withdrew from talks to buy the unit in August saying the industry was “bleeding to death.”

Tata Steel, which bought Corus Group Plc for about 6.2 billion pounds ($8.9 billion) in 2007, has been cutting operations in the U.K. since the 2008 global financial crisis. The country’s industry has been further hit by the Chinese-driven crisis in international markets with plants closing and thousands losing their jobs.

Chanakya Chaudhary, a spokesman for Tata Steel, didn’t answer calls made to his mobile phone. Greg Wood, a partner at Bell Pottinger, an external communications company for Greybull, declined to comment.

The U.K.’s Department of Business is considering a loan of up to 400 million pounds as part of Greybull’s takeover of the Scunthorpe business, the Sunday Times reported on Jan. 17 citing unidentified sources.

Tata Steel had a debt of $10.96 billion as of Sept. 30, according to data compiled by Bloomberg.

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