Government officials will this week start exclusive talks with their preferred buyer for stricken industrial firm British Steel.
Ataer Holdings, a subsidiary of the Turkish military’s pension fund which is known as Oyak, reached a provisional deal to buy the firm out of insolvency at the end of last week.
After former private equity owner Greybull Capital let the firm slide into insolvency in May, the news has given hope to British Steel’s 5,000 workers, despite concerns over Oyak’s suitability as a buyer. Ataer expects the talks to last around two months, and hopes to take control of the company before the year is out.
Details of the deal are yet to be thrashed out, but the fundamentals centre around Ataer’s pledge to keep the business together.
Meanwhile, the business select committee can now get on with a public inquiry into the steel industry, which was prompted by British Steel’s collapse. Committee chair Rachel Reeves said she would ask Ataer to explain its “plans for the workforce” as part of the probe.
What is Ataer Holdings?
Ataer is the investment vehicle of Oyak, which provides Tukey’s armed forces with their pensions. Founded in 1961, Oyak is one of the country’s largest conglomerates, with revenues hitting $9.8bn last year.
It has interests in cement, mining and energy, and holds a joint venture factory with French car maker Renault.
The company is chaired by former Turkish army two-star general Mehmet Tas.
What are the terms?
Ataer intends to inject £900m into British Steel’s Scunthorpe steelworks, which employs 4,000 people, to double its output. The government, meanwhile, has committed to a financial support package worth as much as £300m which will include grants, indemnities and loans.
Ataer’s intention to keep the business together was crucial, according to sources. Other prospective buyers had wished to cherry-pick parts of British Steel, such as its operations in France or the Netherlands.
Why are there concerns?
Oyak has close ties with the Turkish government regime, led by President Recep Erdogan, who has been accused of being autocratic and having little tolerance for dissent. Oyak’s Renault plant has also faced claims of mistreating employees, raising concerns for workers in Scunthorpe who will soon count Oyak as their bosses.
Labour’s shadow business secretary Rebecca Long-Bailey said: “Given the company’s track record, Labour will hold the government to account if there are any moves to undermine the unions and workers’ terms and conditions.”
How did we get here?
Britain’s steel industry has been under threat for years, with EU steel making dogged with overcapacity and Chinese competitors undercutting the market with cheaper products.
The UK produced 7.3m tonnes of steel last year, a low not seen since the Second World War. Scunthorpe is one of only two blast furnaces remaining in the UK alongside Tata Steel’s works at Port Talbot.
Main image: Getty