Tata Steel is considering keeping its UK business, raising hopes that the Port Talbot steelworks and 11,000 jobs can be saved.
Sources close to Tata Steel said it is evaluating the performance of its UK operations and the package of financial support that the government has offered, at the same time as running a sales process.
Sajid Javid, the business secretary, held talks with Tata Steel in Mumbai before of the company’s board meeting on Wednesday. He is thought to have asked it to consider keeping the business. At a press conference after the board meeting, Koushik Chatterjee, executive director of Tata Steel, said the company was still evaluating offers for the UK business.
The deadline for potential buyers to make a formal bid was Monday and the company was expected to try to draw up a shortlist at the board meeting. Eight bidders are thought to be in the running, including metals group Liberty House, Excalibur, a management buyout backed by a Welsh consortium, Leeds-based private equity firm Endless, JSW Steel of India and US group Nucor. Chatterjee said: “We are running a credible process, working with the government. Each step has been done with a lot of careful consideration. We need to consider these bids, understand who wants what, and how, and understand the implications for Tata.”
However, a Tata source said: “It is a possibility they might stay on. They are evaluating that in parallel with the sales process. If what the government is saying is ok, they will stay.” When asked at the press conference about keeping Tata Steel UK, Chatterjee did not rule it out and said the management team were still “looking at continuing and sustaining the business”. But he added: “I don’t think we have a case as yet.” Chatterjee also declined to confirm how many formal bids had been received and the identity of the interested parties.
Javid has said the government is willing to offer hundreds of millions of pounds to a buyer of Tata Steel UK and is also looking at ways to restructure the pension scheme, which has liabilities of almost £15bn and costs more than £100m a year to support. This package could also be available to Tata Steel, although it is not clear whether they would take up the government’s offer of a 25% stake in the business. However, there is a row within the government about Javid’s plan to cut the liabilities of the pension scheme by benchmarking it against the consumer price index (CPI) rather than the retail price index (RPI) and spinning it off into a new financial vehicle. The Department for Work and Pensions is concerned this could set a dangerous precedent for defined benefit pension schemes.