Britain’s largest steelmaker is on the brink of securing an emergency government loan worth hundreds of millions of pounds under the government’s “Project Birch” scheme.
The FT reported that Tata Steel was close to agreeing a deal to fund its UK operations, including its steelworks at Port Talbot in south Wales, potentially saving 8,000 jobs.
In April Labour MP for Aberavon – which contains the Port Talbot site – Stephen Kinnock said that the firm was seeking an emergency loan worth up to £500m.
“Project Birch” was developed during the pandemic to protect struggling firms of critical importance to the UK economy.
In order to access the bespoke funding arrangements, companies must have exhausted all other means of raising money first, including the government’s existing coronavirus assistance schemes.
According to the FT, the plans include a mechanism under which some of the debt due to be provided to Tata in the rescue package could be converted into equity under certain circumstances.
If this is the case, the government could end up taking a stake in the UK steel industry for the first time in over three decades.
In exchange for the loan, the firm, which is owned by the eponymous Indian group, will have to agree to various commitments related to its workforce and cutting carbon emissions.
Tata has reportedly submitted its loan application and the negotiations are approaching an agreement, but insiders warned that it was not yet over the line.
There are hopes that the deal will be finalised this week, which would provide a much needed boost for an industry that was already struggling before the coronavirus struck.
Tata Steel also has operations at other sites in Wales, as well as in Corby and Hartlepool.
The firm said: “Our position continues to be that we have been [seeking] and continue to seek government support in the UK, the Netherlands and all geographies we operate in.
“It would not be appropriate to comment on ongoing discussions with governments.”
The Department for Business, Energy and Industrial Strategy said: “We are in regular discussions with companies across a range of sectors.
“We do not comment on the commercial or financial affairs of individual companies.”