British Steel

The attraction of British Steel

Today Programme

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British Steel employs 3,000 people at its plant in Scunthorpe

British Steel owns the Scunthorpe steel works where 3,000 people work and it employs another 800 on Teesside.

But the firm was put into compulsory liquidation in May after rescue talks with the government broke down. So why does a Turkish investor want it?

Ataer Holdings is already a big shareholder in the Turkish steel company Erdermier.

"British Steel will compliment Erdermier's portfolio, in particular its railway bar production and product range of 3,000 products. It is worth reminding our audience that...Erdermier is the market leader - almost a monopoly for these products," Atilla Yesilada, GlobalSource Partners’ Turkey country analyst tells Today.

"Ataer has question marks about the productivity of British Steel and would try to increase its productivity, but more importantly, British Steel also offers Erdermier a complete portfolio of flat and special distilled products so that it can bid for more projects and public tenders."

Trade could be a factor in British Steel deal

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Atilla Yesilada, GlobalSource Partners’ Turkey analyst, says that it is very likely that the Turkish government is in favour of investment firm Ataer Holdings acquiring British Steel.

"The Turkish government is extremely interested to cut a separate trade deal with Britain after Brexit. I would assume the government blesses this transaction," he told the Today programme.

He added that it would be very likely for Ataer Holdings to seek to cut costs by streamlining British Steel's current management.

Job losses at British Steel?

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The soon-to-be new Turkish owner of British Steel has been speaking to the Financial Times.

The Turkish Armed Forces Assistance Fund (known as Oyak) reached a tentative deal to buy British Steel out of insolvency on Friday and plans to take over British Steel, which employs 5,000 people, by the end of the year.

The FT reports that it plans a productivity drive that could lead to several hundred job losses.

Toker Ozcan, head of the mining metallurgy group at Oyak, said the immediate focus would be to boost output.

He declined to comment on the scale of possible job cuts but said that productivity at the company’s main plant in Scunthorpe was “very low” compared with other European steel producers.

“I am not focused on headcount but on productivity,” he said, adding: “We will take productivity to where it needs to be.”

British Steel 'comes cheap'

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Ataer Holdings, an investment company, has reached a tentative deal to rescue British Steel.

A little oddly, Ataer is owned by the pension arm of the Turkish military.

But Atilla Yesilada, GlobalSource Partners’ Turkey country analyst tells BBC Radio 4's Today programme that Ataer Holdings is actually run completely by civilian administrators and board members, so it has no say in what happens in the military or government.

"A lot of mergers and acquisitions don't make sense, but this one does at many levels," he says.

"Ataer is a pension fund and it needs to diversify its portfolio away from Turkey because of the relentless currency depreciation and one way to do so is to acquire real assets in countries like Great Britain."

He adds: "British Steel is a great company that comes cheap... Ataer Holdings is going to inject roughly £500m or 300 million tonnes of steel capacity, which is much cheaper than building it at home."

British Steel workers 'must not be an afterthought'

British Steel plant at Scunthorpe

Ross Murdoch, national officer at GMB, the union for British Steel workers, warned the company's potential new owner - the Turkish army pension fund - that "dedicated and loyal workforce must not be an afterthought amidst all of the speculation".

He said: "Our members are staring redundancy in the face as uncertainty continues to hang over the company.

"“GMB looks forward to engaging with the new management as soon as it is established to ensure direct employment protection and decent terms and conditions for the workers who have been put in this position through no fault of their own."

British Steel's official receiver confirms 'acceptable offer'

British Steel
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The official receiver to British Steel has confirmed that it has entered exclusive talks with Ataer Holdings, an affiliate of Turkey's military pension fund.

It said that following several bids: "Heads of an agreement to purchase British Steel have been signed, triggering a period of detailed due diligence of the company ahead of its full sale."

The official receiver said: "Following discussions with a number of potential purchasers for the British Steel group over the past few weeks I am pleased to say I have now received an acceptable offer from Ataer Holdings A.S. for the purchase of the whole business and I am now focusing on finalising the sale.

"I will be looking to conclude this process in the coming weeks, during which time British Steel continues to trade and supply its customers as normal. I would like to thank all employees, suppliers and customers for their continued support which has been essential to get to this point.”

British Steel an attractive option for Turkey

BBC Radio 5 Live

A military swearing in ceremony in Ankara, Turkey
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British Steel's new owners? A military swearing in ceremony in Ankara, Turkey.

Is the Turkish military pension fund a wise choice to buy British Steel?

Professor Barbara Shollock, head of engineering at King's College London, says: "If you look a little bit closer at the Turkish military pension they are also part or holders of the major steel producer in Turkey."

But pensions funds demand returns - can British Steel deliver?

Professor Shollock reckons they can. "The British steel industry is highly regarded, the products that they make are high value and high quality. I think if [Turkish steel companies] they are looking to differentiate by coming into the EU, they are sitting right at the cusp between Europe and Asia.

"Perhaps joining in with a stronger European presence might feel that they are consolidating their market and broadening their opportunities."

What now for British Steel?

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British Steel worker
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Who is going to rescue British Steel?

There has been a great deal of speculation that Turkey's military pension fund is front of the queue to buy the UK's second biggest steel producer but British Steel's receivers aren't commenting.

Professor Barbara Shollock, head of engineering at King's College London, tells Wake Up to Money: "It is a challenging situation. The steel industry, first of all, is key to the UK economy.

"It is what we call a foundation industry and that means that it is one of the core producers of materials that feed into other manufacturing and key things like rail, automotive, construction even, so it is very important that we have strong foundations."

But she says that there are two biggest challenges facing the steel industry. Firstly, that it is a very energy intensive process and secondly, "it has a significant carbon footprint".