Government open talks with British Steel to keep firm afloat
Ministerial talks began to prevent British Steel's collapse yesterday after it secured the backing of shareholders and lenders to survive until the end of May.
The opening of government talks comes as a major boost after insolvency experts had already been lined up in the event that the prospect of further state lending was rejected.
The firm, owned by Greybull Capital, had already been lent £100 million by the government back in April, in order to pay off an EU carbon bill.
Yet amid “Brexit-related issues”, it revealed on Thursday that it required further financing from the state in order to tackle its problems head on.
Much of the blame falls on a decline in sales from European customers amid the Brexit process, while the fall in the value of the pound sterling since the EU referendum in 2016 and the growing trade war between China and the United States have exacerbated these issues.
However, British Steel also confirmed on Thursday that it had received the green light from creditors and the funding necessary to continue operating until a solution to its financial woes can be found.
A British Steel spokesperson said: "As the business navigates the significant uncertainties caused by Brexit, and explores options to strengthen the business for the long term, we are pleased to confirm that we have the required liquidity while we work towards a permanent solution”
Now ministers will likely weigh up the option of nationalising British Steel against calling in the administrators, with a £75 million government bailout another option on the table.