British Steel in liquidation after failing to secure loan

A logo is pictured on a sigh outisde British Steel's Scunthorpe plant in north Lincolnshire, north east England on May 22, 2019. Picture: LINDSEY PARNABY / AFP

Owned by investment firm Greybull Capital, British Steel employs about 5,000 people, mostly in Scunthorpe, while 20,000 more depend on its supply chain. Greybull paid Tata Steel a nominal £1 for the business three years ago. After making a profit in 2017, British Steel cut about 400 jobs in 2018, blaming factors such as the weak pound and uncertainties surrounding Brexit, which it said hammered its order book.

Jeff Kabel, chair emeritus of the International Steel Trade Association, said the government was paralysed by Brexit and unable to address the steel sector’s challenges. Signs of the ripple effect of British Steel’s collapse are already beginning to emerge. Hargreaves Services, a company based in Durham, northern England, which supplies materials handling and other services, said earlier if the steelmaker ceases to trade, this could reduce its profit before tax in the next full year by about £1.3m.

Greybull had been negotiating with the government for the loan, a source said, adding the government wanted Greybull out of the picture before putting more money into the business for fear those funds will eventually end up in Greybull’s hands. Greybull is British Steel’s only creditor at the holding company level and has secured its loans against its assets.

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