BackExecutives at Tata Steel’s Port Talbot plant planning management buyout
Reports say Stuart Wilkie, managing director of Tata Strip Products UK, has been named the leader of a group of managers looking for private investors for buyout plan
Premium
Mumbai: Senior executives at the Tata Steel Ltd’s Port Talbot factory in the UK are considering a management buyout of the facility.
According to several UK media reports, Stuart Wilkie, managing director of Tata Strip Products UK, was named the leader of a group of managers looking for private investors and government support for a buyout plan for the ailing facility. No formal proposal with financial details has been submitted so far.
Tata Steel’s Port Talbot plant is one of the three blast furnace-based steelmaking facilities that is part of the $12.9-billion Corus Plc acquisition Tata Steel made in 2007.
Senior managers at Tata’s South Wales plant were said to be called for an emergency meeting chaired by Wilkie, Sky News reported on Tuesday.
The so-called proposal is based on a “turnaround plan" presented to but rejected by the board of Tata, according to ITV News, which said that the bid would require funding of £100 million. Employees could be asked to invest as much as £10,000 each, the report said.
“Tata Steel Europe welcomes credible expressions of interest for Tata Steel’s UK operations. It is our policy that we are not naming, confirming or commenting on any potentially interested investor or bidder at this point," Tata Steel said in a filing to the BSE, in response to reports of a potential management buyout bid for UK assets.
“All expressions of interest, including any management buy out proposals, will be considered when received. In the interests of all stakeholders every credible expressions of interest will enter the same rigorous assessment process to ensure the best value and prospects of sustainability," the company said.
Tata Steel Europe said that it is engaged in a process to seek strategic alternatives for Tata Steel’s UK operations.
“To deliver greater clarity for all key stakeholders, such as employees, customers and suppliers, Tata Steel Europe is committed to seeking all credible options in an urgent manner," Tata Steel Europe said.
The management team’s rescue plan reportedly centres on keeping the blast furnaces going, in contrast to a plan drafted by commodities tycoon Sanjeev Gupta who is working on a bid for the unit by his Liberty House group, a PTI report said on Wednesday.
Tata Steel has been struggling with its UK assets due to a slowdown in steel demand and growing cheaper imports into that country.
On 30 March, Tata Steel directed its subsidiary Tata Steel Europe to consider various restructuring options for its UK assets, including a sale in part or whole. As part of the restrucuturing, Tata Steel has announced the sale of its long products division to Greybull Capital for a nominal amount and on a debt-free basis.
Analysts expect the sale of the remaining UK assets to attract a similar valuation.
Rakesh Arora, MD and head of research at brokerage Macquarie Capital Securities India Pvt. Ltd, in a 11 April report wrote that he expects a zero value to be the best case outcome for Port Talbot and the other UK flat steel business.
As of September, Tata Steel had consolidated debt of ₹ 71,798 crore—most of it associated with the global operations. The standalone debt of Tata Steel India was at ₹ 25,332 crore.
On 18 April, Tata Steel said it has reached out to 190 potential investors for its UK assets.
Milestone Alert!Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.
