Reborn British Steel seals £90m funding deal

The reborn British Steel has secured almost £100m of new financing to spur its turnaround, delivering a shot in the arm to an industry shaken by uncertainty over Brexit and transatlantic trade conflict.

Sky News has learnt that the company, which owns the giant Scunthorpe steelworks in the north of England, has struck a deal to secure £90m of debt funding from US-based White Oak Global Advisors.

The new financing will be announced alongside British Steel’s full-year ‎results, which are expected to show the second consecutive year of profitability since the company was acquired by Greybull Capital, a private investment firm.
A source close to the situation said that British Steel would reveal an ambitious future investment plan that would underline its board’s confidence in the company’s prospects.
Much of the additional funding is expected to be invested in modernising machinery and equipment at British Steel’s plants in the UK, France and the Netherlands.
The announcement is expected to be made on Wednesday, with the plans disclosed during a period of continued turbulence for the wider industry.
Last month, President Trump imposed a 25% tariff on steel imports and a 10% levy on imported aluminium‎ products, one of a number of salvoes which have threatened to escalate into a full-blown global trade war.
The Government’s ability to strike a united front with European Union counterparts has been hamstrung by the stuttering nature of Brexit negotiations.
While the UK exports roughly 350,000 tons of steel to the US annually, British Steel is a relatively lightweight exporter to the country.
The company, which was previously part of the Indian-owned Tata Steel, has won plaudits for its instant turnaround under Greybull’s ownership.
It made a profit in its first full year ‎after the deal, aided by the devaluation of sterling after the EU referendum and an increase in steel prices.

Another announcement ‎with profound implications for the long-term future of the UK steel industry was made late last month, involving the merger of Tata Steel’s European operations with those of German rival Thyssenkrupp.
That deal, which when completed will create the continent’s second-biggest steel producer, was welcomed by trade unions‎ whose members include thousands of workers at the vast Port Talbot plant in Wales.
Tata Steel is now in the process of selling a number of other UK-based subsidiaries, including Cogent Power, which ‎supplies electrical steels.
The new financing for British Steel will come six months after its chief executive left the company – little more than six months after his appointment.
Its performance has, though, offered a ray of hope to an embattled industry, and brought welcome news for Greybull, which was the owner of Monarch Airlines when it went bust last autumn.
AlixPartners, the financial advisory firm, is understood to have advised British Steel on the new funding from White Oak.