Bidders for Tata Steel’s UK business have criticised the “confusing” sales process and lack of a clear timetable, as the group’s parent company seeks to finalise a shortlist of bidders for the troubled business.
The Financial Times reported last week that Tata has warmed to the idea of keeping its British steel operations after being offered generous inducements by the government, including a low-interest loan and changes to the legacy British Steel Pension Scheme.
The business department says that the Indian industrial company is still pushing ahead with the sales process ahead of an informal deadline when Tata’s board meets in Mumbai in late June.
A longlist of seven potential buyers, drawn up two weeks ago, could be whittled down to a shortlist by the end of the week.
But one government figure said that ministers were working hard to try to persuade Tata to reverse its decision to leave: “That’s where the energy is being expended,” he said.
One bidder said the government had failed to reassure it that ministers were serious about the sale of the sprawling steel business, which includes the giant Port Talbot steelworks in south Wales.
“Since the third week of May onwards there has been a material uncertainty about the whole thing,” he said. “We have had very little interaction between ourselves, Tata’s agents KPMG and HM Government.”
Adam Price, Plaid Cymru’s business spokesman, told the FT: “The general mood in Wales is hardening against Tata retaining its assets. Tata now seems to be in a position where it is the arbiter between itself and other bidders as to who should receive substantial public investment.”
Some union members walked out of a Tata town hall meeting in Port Talbot last week in a sign of growing frustration with the company, while some bidders believe that Tata is not disclosing enough financial detail about the business.
One person close to another potential buyer, Liberty House, said there was “outrage” at suggestions — reported last week — that bidders had not given sufficient long-term assurances over the future of the business.
A spokesman for Excalibur, which hopes to carry out a management buyout, said its business model was long-term and would “only mature beyond a two to three-year period”. It has hired advisers including Evercore, an investment bank, and Ernst & Young.
One bidder said the process appeared to be a “charade”.
Sajid Javid, business secretary, has offered incentives to potential buyers, and to Tata, including an equity stake of up to 25 per cent and loans of hundreds of millions of pounds.
The government has also begun a consultation on reducing the rate of increase for the 130,000 members of the steel pension fund — which could cut £2.5bn from its long-term liabilities.
There have been tentative signs of a recovery in steel prices in recent months after they plunged because of a worldwide glut — blamed widely on “dumping” by Chinese producers.
On Wednesday, Mr Javid was urged to commit to cutting energy costs and improving state procurement during a meeting of ministers, steel executives and union leaders.
They also pressed him to hasten efforts to stop cheap imports of Chinese steel from flooding the market in Europe by following the tough example set by the US.
Mr Javid agreed to several recommendations on energy costs, procurement, trade and research on how the sector can flourish.
Gareth Stace, director of UK Steel, said there was still further action to be taken to help the industry to be competitive. “This is about holding a magnifying glass to business costs that our competitors don’t face and removing them,” he said.
“UK steel producers can compete on quality and cost with the best firms from around the world, but they cannot do so if energy costs are artificially higher and they face unfair competition from dumped steel.”