The sale of Tata’s Port Talbot plant has been put on hold, according to media speculation. The article in the Telegraph indicates that the Indian-based owners are taking their time to think about the implications of future EU deals, and to consider any potential pension scheme liabilities.
Sales Process and future of Port Talbot Plant
Early into the sales process, Tata Steel indicated there were seven parties interested in purchasing the plant, including the steel group Liberty House, Greybull, JSW Steel and Nucor.
The number of potential buyers has since been narrowed down, and the government has made an offer to purchase a 25% share in the business, but it has rejected calls to take ownership of the business outright.
Last month there was speculation that Tata was about to make a deal with the UK government and that the company was to receive a £1 billion government loan. However, recently, a further obstacle has been placed in the way of the sales process following concerns that a heavily increased levy could be put in place by the Pension Protection Fund should the deal with the government go ahead.
In Parliament in June – in response to a question by Aberavon MP Stephen Kinnock – Prime Minister David Cameron stated that alongside business secretary Sajid Javid, the government was doing everything it could “to secure a future for Tata steel”.
The Prime Minister added that the sales process was moving along and he felt that steel “was better off in the inside the European Union”.
New potential buyer
Now, media reports indicate that Ed Truell, a private equity investor, is now in talks with the company, the Treasury and the Pensions Regulator about purchasing the plant. Rather than viewing Brexit as a problem, Truell told CITY A.M. that the decision to leave Europe has made the steel plant “a lot more attractive to potential buyers”.
Decision to Sell
Tata made the announcement that it was going to sell the plant back in March 2016 following a review of the company’s European portfolio. Tata concluded that manufacturing costs and lack of demand for steel were impacting on the competitiveness of the business.
It also stated there had been a deep concern over the “deteriorating financial performance of the UK subsidiary” in the previous 12 months. Media reports at the time speculated that the plant was losing as much as £1 million pounds a day.