Thursday , August 11 2022

British Steel seeks a government loan of 100 million pounds after the freeze of the European Union plan | Business news


The second largest steel producer in the United Kingdom is looking for an urgent government loan of £ 100 million after the failure of Theresa May to refrain from approving a Breitek agreement would leave it frozen by a carbon trading system throughout the EU.

Sky News has known that British Steel, which employs 5,000 people directly, is talking to Whitehall to obtain emergency funding in a few weeks.

The ministers have written to the KPMG professional services firm to advise them on the talks, which have taken place for several weeks, and have informed this weekend that day.

Greg Clark, business secretary, has been informed of the situation.

I understand that British Steel is facing a cash flow deficit as a result of the European Union's decision not to allocate to its UK-based companies its usual permits within the framework of its trading system, 39; carbon emissions (ETS).

According to the scheme, industrial pollutants, which should have obtained the permits last month, can use their allocation to pay for their previous year's emissions.

The freezing of British companies from the allocation of the EU ETS in the EU covers more than 2 million pounds of emissions, equivalent to 100 million tonnes of carbon credits: British Steel represents approximately 5% of the total.

However, it is clear that British Steel has already used the last year's permits to finance working capital requirements, leaving him unable to pay the current round of carbon credits.

It is believed that the extension of the six-week bitch this week aggravated the company's problem, since without parliament approving an imminent agreement, the United Kingdom would continue to be excluded from the STD.

I understand that the government's participation in the talks about providing financial support to British Steel is led by the business, energy and industrial strategy department (BEIS), with the participation of the environmental agency and the treasury

British Steel has addressed officials about a short-term commercial loan, although it is also considered that there have been other options under consideration.

A source expressed its skepticism about the probability that this loan would be granted due to issues related to State aid that would occur.

Owned by the private investment firm Greybull Capital, British Steel has been reactivated since its closure since it was acquired by the Indian giant Tata Steel in 2016.

The company even overflowed in its first year after Greybull's takeover and reported positive results before interest, taxes, repayments in each of the last three years.

PricewaterhouseCoopers (PwC) is advising Greybull for the search for new funds, while EY, one of the four major accounting firms, is advising the company's lenders, which include PNC and ABN Amro.

A source close to the discussions dismissed the speculation that the British Steel Scunthorpe plant could face an uncertain future as a result of the financing stalemate.

"There is no scenario in which this generates uncertainty about Scunthorpe," the source said, denying the suggestion that the ministers had been warned that they could face the closure.

However, the company's prospects for a loan from commercial lenders in the next fortnight were fired remotely, which means that it could face a severe financial penalty in Brussels the year Next for not having delivered your credits on time.

In addition to the 5,000 people who work directly, the supply chain of British Steel is responsible for 20,000 more jobs.

The company is the largest provider of steel rails in Network Rail and its French counterpart SNCF.

It produces 2.8 million tonnes of steel annually, which means that it occupies the second place behind Tata Steel, the owner of the extensive steel mill in Port Talbot in Wales.

The program of change of the company under the ownership of Greybull has meant cost reductions, more than 150 million pounds sterling investment in plants and machinery and a series of acquisitions in the foreign country.

It is said that British Steel is pursuing a new expansion through the possible acquisition of Ascoval in France.

Earlier this month, the company promoted to Gerald Reichmann, its chief financial officer, the first executive.

In a statement to Bloomberg News in February, Mr. Reichmann said that British Steel had "robust plans to deal with the different scenes of Brexit, including the change in the carbon credit regime."

British Steel exports much of what it produces in Europe, which means that problems related to Brexit have been an increasingly urgent headache for the company and its shareholder.

"The reality is that this impasse is making UK industry much less competitive," an informant said.

Last month, the BEIS selected committee accused the ministers of neglecting the steel industry by not revealing a sectoral agreement as part of the government's industrial strategy.

The loss of financing of British Steel is the last problem that affects the industrial sectors of the last months.

Much of the focus has been on the automotive sector, with job cuts at Ford and Nissan's decision to abandon plans to build their X-Trail SUV at Sunderland.

In February, Honda confirmed the closure of its Swindon plant in 2021 and threatened more than 2000 jobs.

Greybull has a history of investments in problem firms, including the Monarch airline, which collapsed in 2017.

A spokesman for British Steel said: "Brexit has several challenges to all British companies and we are not immune. We are discussing the impact of Brexit in our business with ministers and officials of the Department of Energy, Enterprise and Industrial Strategy and have been extremely sensitive and helpful so far ".

Greybull refused to comment this weekend, while BEIS did not respond immediately to a comment request.

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