Tata plan to sell UK unit paused owing to Brexit chaos: Report
July 3, 2016, 12:37 pm

Tata Steel UK employs about 15,000 people, with 5,500 employees in Port Talbot [Image: Tata Steel Europe]

Tata Steel said in March that after years of losses it planned to sell its UK operations, including the Port Talbot plant in South Wales, putting 15,000 jobs at risk and raising the alarm for British politicians.

The Sunday Times reported that the move has been put on ice as it assesses the fallout of the Brexit vote.

“The Indian giant will ‘pause’ the sale amid uncertainty over the impact of the decision to leave the EU,” the newspaper quoted sources as saying.

The board is yet to make a formal decision but is under less pressure to sell after a jump in steel prices, which has cut losses at the south Wales site, the report said.

The UK steel industry has been hit by high energy costs, inefficient output and a flood of cheap Chinese exports.

Tata will reportedly stall the auction to await the outcome of a UK government deal to cut its 14 billion pound pension liabilities as well as talks on EU trade deals.

Both the proposed loan and the pension changes risk setting the UK on a collision course with Brussels over state-aid rules, the Financial Times reported earlier this year.

“The strategic review of our UK business continues. Like businesses across the UK, parties involved will be considering implications from the referendum. We remain committed to working towards the best possible outcome for our UK business,” a Tata statement said.

Bidders include Liberty House Group, Hebei Iron & Steel Group, JSW Steel Ltd., Excalibur Steel, Greybull Capital LLP, U.S. steel giant Nucor Corp. and Leeds, England-based fund Endless, the Sunday Times has reported.

The steelmaker reported a net loss of 32.1 billion rupees ($477 million) in the three months to March 31. The loss included an exceptional item of 28.6 billion rupees on account of a non-cash writedown of fixed assets and restructuring linked to its European operations, it said.

Source: Agencies