November 11, 2019 11.37 am This story is over 52 months old

Chinese firm set to rescue British Steel in £70m deal and save thousands of jobs

An announcement is expected on Monday afternoon

British Steel is expected to announce a rescue deal with China’s Jingye Group on Monday afternoon, which could save thousands of UK jobs.

As previously reported, British Steel, which employs around 4,500 people at its Scunthorpe site and several sister sites, entered an insolvency process in May 2019. It also supports an additional 20,000 jobs in the supply chain.

Another 1,000 jobs are based in France and the Netherlands, which are also believed to be included in the deal.

The firm was reportedly seeking a £75 million government loan to keep afloat, blaming what it calls “Brexit related issues”.

A sales contract has been entered into with the Jingye Group to buy the business and assets of British Steel Limited, in a deal believed to be worth £70 million. It is understood that the government will help in the form of loan guarantees and other financial support.

British Steel has been kept running by the government via the Official Receiver since May, when the company went into liquidation.

It is expected that once the agreement is signed, the company will continue to be run by the Official Receiver for at least a month before being transferred. This comes after talks with the company behind Turkey’s military pension fund, Ataer, stalled.

Staff at the Lincolnshire site were reportedly told in Ann email that contracts between British Steel and Jingye have been exchanged.

Mulligans Sports Bar in Scunthorpe posted on its Facebook page on Sunday evening with a video, claiming the deal for British Steel was apparently completed “from the good people purchasing”.

The Official Receiver released an update on Monday afternoon, which read: “The Official Receiver and Special Managers from EY can confirm that a sales contract has been entered into with Jingye Steel (UK) Ltd and Jingye Steel (UK) Holding Ltd (together, Jingye), to acquire the business and assets of British Steel Limited (BSL), including the steelworks at Scunthorpe, UK mills and shares of FN Steel BV, British Steel France Rail SAS and TSP Engineering.

“The sale also includes the shares owned by BSL in Redcar Bulk Terminal Limited.

“Completion of the contract is conditional on a number of matters, including gaining the necessary regulatory approvals. The parties are working together to conclude a sale as soon as reasonably practicable.

“The business will continue to trade as normal during the period between exchange and completion. Support from employees, suppliers and customers since the liquidation has been a critical factor in achieving this outcome.”

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