Industry

28 MAY 2019

RAIL INDUSTRY OFFERS CONTINUED SUPPORT FOR BRITISH STEEL

The Official Receiver has today claimed that “good progress is being made in identifying potential buyers for British Steel”, with “multiple parties already signing non-disclosure agreements.” 

The news comes as the rail industry and politicians across party lines have all joined efforts to help rescue the financially stricken steelmaker from collapse.

British Steel supplies 95% of the UK’s railtracks, but collapsed into insolvency last week - less than three years after it was bought by private equity group Greybull Capital for a nominal £1 in 2016.

5,000 direct jobs and a further 20,000 jobs in the supply line are all at risk if the troubled steelmaker is forced to close its remaining plants at Grimsby and Teesside plants including Skinningrove and Lackenby. 

The official receiver is now working around the clock to try and find a buyer for the financially-stricken company, and today they said: “Good progress is being made in identifying potential buyers for British Steel. Multiple parties have signed non-disclosure agreements giving them access to a detailed information memorandum and virtual data-room that my team has developed to inform their bids. Expressions of interest are due with me by early June.

“The indemnity provided to me has enabled British Steel to continue to trade and the company retains good support from its customers. I would like to thank the workforce for their ongoing support. All staff have been retained and continue to be paid.”

Network Rail say they have improved their order with British Steel and offered immediate payment to ease the pressure on cashflow.

A Network Rail statement said: “We have been working closely with British Steel and colleagues across government for many weeks. We have done what we can to help ease the company’s financial difficulties. We have improved our order book with the company – increasing rail production volumes, bringing orders forward and committing to a long term schedule – as well as offering immediate payment to ease the pressure on cash flow. 

“British Steel is a major supplier to Network Rail, providing around 100,000 tonnes of rail a year and playing a major part in our plans to maintain, renew and upgrade the railway. We are confident that we remain able to carry out critical work on the railway in the coming months and beyond. Longer term we have plans in place so that we can continue to deliver the reliable railway millions of people depend on every day. We understand this is a very worrying time for British Steel employees and we will work with the liquidator and continue to offer our support.”

The Railway Industry Association (RIA) also expressed their full support, saying: “The RIA stands by British Steel in these difficult times. We support Network Rail’s efforts to increase British Steel orders, ensure prompt payment terms, and commit to a long term schedule whilst immediate funding and a potential buyer is sought for the company.”

Politicians from all sides have also called for British Steel to be rescued and, if necessary, brought back into public ownership to protect jobs and support the UK’s infrastructure and renewable energy systems.

Labour Party leader Jeremy Corbyn said: “Britain’s proud steel industry has a major role to play in ushering in a green industrial revolution. It needs support, not a death warrant. If an agreement cannot be struck with British Steel, the government must act to take a public stake in the company to secure the long term future of the steelworks and protect peoples’ livelihoods and communities.”

A joint statement from Conservative Tees Valley mayor Ben Houchen and Teesside’s MPs and council leaders said: “This issue is bigger than party politics. We also maintain that all options to save the company must remain on the table, including significant public subsidy and nationalisation.”

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