The deal to rescue Scunthorpe — sealed without government loans or other financial support — will see workers take a 3 per cent pay cut and no longer be active members of the £14 billion British Steel Pension Scheme. The Times reports that scheme and its liabilities remain for now with Tata Steel, the Indian company that sold Scunthorpe and is attempting to quit the rest of its UK interests.
Scunthorpe, which is second in size only to Port Talbot and has been up for sale for three years, has been bought by Greybull Capital, a private equity player best known for buying other distressed assets such as Monarch airlines and the convenience stores of Wm Morrison, the supermarket chain.
The Scunthorpe works and allied facilities on Teesside are to be renamed British Steel. The facilities employ 4,400 people with a further 400 at a plant in northern France. It counts Network Rail and its French counterpart SNCF among its largest customers, as well as the UK construction industry and the British division of the Caterpillar diggers group.
Greybull, based in London, is run by the brothers Marc and Nathaniel Meyohas, whose father, a French lawyer, made his fortune in private equity in the United States. A third Greybull partner is Richard Perlhagen, whose father is a Swedish pharmaceuticals tycoon.
Greybull already has interests in the steel trade, having bought the bust Metalrax group, now trading as Arc Specialist Engineering. It is also among the seven bidders that have registered an interest in buying all or part of the rest of Tata Steel in the UK. Those assets include the works in Port Talbot, Llanwern, Rotherham and Stocksbridge in Sheffield.
Greybull first came into the public gaze as part of the investment group in the bankrupt Comet electricals chain four years ago and was also involved in an abortive attempt by activist investors to shake up National Express.
Marc Meyohas said last night that a rescue plan aided by Tata’s mothballing of the plant and the eliminating of hundreds of workers had already made the business profitable. It has a turnover of £1.5 billion a year.
He added that Greybull was putting in £400 million of working capital and investment in the facilities. Of that, £200 million is in equity from Greybull funds. He declined to name who the beneficial shareholders would be, other than to identify the Meyohas and Perlhagen families.
A further £200 million of debt has been raised with PNC, the American bank, with lending facilities from Citibank. Contrary to reports, neither the Treasury nor the business department is putting up any financial support.
“This is entirely funded by the private sector, which is a testament to the quality of this business,” Mr Meyohas said.
The British Steel name has not been in use since the 1999 merger of the privatised UK steel company that bore the name with Hoogovens, of Holland, to create Corus. Tata Steel took over the merged company in 2006.