Government in talks to save British Steel

21/05/2019

Government ministers are in talks to prevent the collapse of British Steel, after the firm secured funding from shareholders and creditors to stay afloat until the end of May. The company, owned by Greybull Capital, had previously been tipped by insolvency experts as unlikely to secure another government loan to survive this month, having already been lent £100m in April to pay an EU carbon bill.

Business blames Brexit for loss of trade

Talks between Greybull Capital and the government to consider a further state loan to British Steel come after the company announced last week that “significant uncertainties caused by Brexit” were forcing it to “explore options to strengthen the business for the long term.” A spokesperson for the company confirmed that creditors had agreed to provide support for the short term, stating: “We are pleased to confirm that we have the required liquidity while we work towards a permanent solution.”

With regards to longer term solutions however, the company will have to wait and see whether government discussions lead to a proposed £75m bailout being secured, and whether a management buyout will be sought. Other options on the table include nationalising the company or going into administration. Reports state that the firm has already lined up potential administrators to take over in the event that a loan is not secured.

Steel sector braces for ripple effect of potential collapse

Industry leaders have warned of the damaging ripple effects that the potential collapse of British Steel could have on businesses across the UK steel sector. The company is the UK’s second largest steel firm, employing 4,500 workers directly and approximately 20,000 indirectly via its supply chain. Against this backdrop, Alasdair McDiarmid of the steelworkers’ trade union, Community, urged the government and Greybull Capital to “to focus on finding a solution that secures jobs and the long-term future of British Steel,” adding: “At this critical time we would urge everyone involved, including suppliers and contractors, to hold their nerve and refrain from taking any knee-jerk actions that could create further barriers to a successful outcome.”

The UK steel sector has seen continued challenges in recent years, with the rising availability of cheap imports from nations including China placing local business under threat. Amid what it terms “Brexit-related issues,” British Steel has seen a further fall in sales from European customers, with the declining value of the sterling since the 2016 EU referendum and the intensifying trade war between the United States and China further impacting business.

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Are you owed money?

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See the section below – About CPA.

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About CPA

The Credit Protection Association can help!

Formed in 1914, CPA has been providing credit management services to SMEs for over 100 years.

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We regularly publish lists of the latest insolvencies but by then it is too late. Our credit reports however predict approximately 96% of company insolvencies long before they arrive.

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Why use a third party collector?

As a third party collector, we can also get your payments prioritised over those who are not as hot on collections. When you customer receives a letter from the Credit Protection Association regarding their outstanding account, they are going to want to get that resolved as a priority. Our overdue account recovery service can get your unpaid invoices to the top of their “to do” list and get your invoice paid.

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