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Turkey's Ataer swoops to rescue British Steel

A British Steel worker watches production at the company's Scunthorpe site
A British Steel worker watches production at the company's Scunthorpe site

Turkish investor Ataer Holding has been selected as the preferred bidder for British Steel, safeguarding thousands of manufacturing jobs, with an announcement due on Friday.

Sources close to the situation said that Ataer Holding - backed by a Government support package - had been picked as having the strongest offer for British Steel, which collapsed into insolvency in May.

The company was taken over by the Official Receiver, assisted by managers from consultancy EY, who have been seeking a buyer.

Official confirmation of the preferred bidder has been delayed by what one insider called “minor business questions and queries for Ataer”. The Eid religious festival and a national holiday in Turkey has meant that much of the country is shut down until Friday. 

“It had been expected to get over the line earlier this week but the Official Receiver and EY had trouble getting a response from Ataer,” another source said.

One of British Steel's 4,500 staff who jobs could be saved by a sale of the insolvent business

The insider said the issues in question were minor, although there was still a “very slim” chance they could cause the deal to stall. 

Once the preferred offer is announced by the Official Receiver, there will be a four- to eight-week period allowing the bidder to carry out due diligence on Scunthorpe-based British Steel, which in addition to the 4,500 staff on its pay roll supports many more jobs in its supply chain and the local economy.

Should Ataer not go ahead with a purchase after due diligence, it is likely that Liberty, part of the GFG Alliance, will take run at British Steel, having been seen as the next best bidder.

It is understood that Ataer, the investment arm of Oyak, the Turkish military pension scheme, is proposing to pay between £60m and £70m for British Steel.

The deal hinges on a financial package from the UK taxpayer worth up to £300m, coming in the form of commercial loans and grants.

The Department for Business, Energy and Industrial Strategy (BEIS) is understood to have signed a memorandum of understanding with Ataer to get the sale through.

Ataer’s plan for the Scunthorpe site would preserve the vast majority of the jobs, but is understood to follow a strategy conceived by British Steel’s existing management, which could see about 500 positions cut.

It is also thought that Ataer could step up British Steel’s output, with steel being sent to Turkish company Erdemir for processing. Ataer also owns nearly half of Erdemir.

There is also a long-term plan to swap Scunthorpe’s blast furnaces to gas power. 

The Official Receiver made the decision to keep British Steel running rather than winding it up and selling its assets in a fire sale to pay creditors because keeping it operational was seen as the best way of finding a buyer.

British Steel is being bankrolled by the Government while in insolvency through an indemnity agreementat a cost of several million pounds a week . 

Ministers have said they hope to recover this money once the plant is sold but this is looking increasingly doubtful in light of the sale price and financial support.

A spokesman for the Official Receiver said: “The sales process is ongoing and we continue to assess the most attractive offers received.”

Ataer could not be reached for comment.