British Steel deal could fall through as Chinese buyer Jingye ‘falters’
The takeover of British Steel by Chinese giant Jingye is said to be in jeopardy, as the government lines up alternative buyers.
If the talks between the Official Receiver and Jingye collapse, it will be the second time the government’s chosen buyer for the stricken firm falls through.
Read more: Jingye Group promises to save thousands of jobs in £50m deal for British Steel
The same happened with Turkish suitor Ataer earlier in the Autumn, when the two sides could not come to an agreement before an exclusivity period ended.
One government source said that this time, there was no “arbitrary” deadline that has been placed on this stage of the sale process.
But if it fell apart it would provide an immediate headache for newly re-elected Prime Minister Boris Johnson in the industrial heartlands that catapulted him to a landslide election win at the end of last week.
Officials are said to be holding informal talks with Liberty Steel, one of Jingye’s rivals in the race to buy the steel maker.
The government has kept British Steel’s running since May at a cost of half-a-billion pounds to the taxpayer.
If talks were to collapse, it would put the jobs of 4,000 employees at risk again. The news was first reported by the Sunday Telegraph.
The government reportedly hopes that Liberty, which is owned by British businessman Sanjeev Gupta, will step in should that be the case.
Gupta’s previous attempts to buy British Steel were rejected in favour of first Ataer’s bid, then Jingye’s.
City A.M. understands the Official Receiver is not holding formal talks with Liberty, but that the department for Business, Energy and Industrial Strategy has remained in regular contact with the firm.
This came despite both raising doubts among observers about the respective human rights and national security implications.
Liberty’s plan is understood to include cutting about 1,000 jobs in a bid to reign in costs at the company – a move that would hit British Steel’s native Scunthorpe hard.
Last week, business secretary Andrea Leadsom told the Sunday Telegraph that back-up buyers are ready to swoop in.
She said: “We have worked tirelessly to seek to identify potential buyers and we do still have interested parties.”
Read more: New buyers on standby for British Steel if Jingye deal falls through
The constituency, normally a Labour heartland, voted Conservative in last week’s general election, ousting its longstanding MP Nic Dakin.
A spokesperson for the Official Receiver said: “A sales agreement for the purchase of British Steel was signed in early November and the parties have been working together since then to complete the deal as soon as practicable.”