A media report has suggested that Tata's UK steel business has been reducing its £1million-a-day losses for the past few months, closing on an operating profit again for the first time since it sunk into crisis. Sources said the business was headed for a profit even before its parent company was put to sale last month.
The British government said it was willing to take a 25 per cent equity stake to help secure a sale, and the emergence of a management buyout bid. It has offered “hundreds of millions of pounds” in support for potential buyers, adding it could even buy up to a quarter of the company. The Department for Business, Innovation & Skills released a statement saying, “A package of support worth hundreds of millions of pounds will be made available on commercial terms to potential buyers of Tata Steel UK.” The statement was soon followed by a second meeting between Business Secretary Sajid Javid and Tata Global chairman Cyrus Mistry, in Mumbai.
Most of the financial support is expected to be through debt financing, according to the statement. However it said other more complex forms of financing were also on the cards, including supporting any purchaser by taking a minority stake of "up to 25 per cent" to help a sale. Such a move, the government stressed, would not see it "acquire a material element of control over the business". The British government was thrown into crisis late last month when Tata Steel unexpectedly put its British business up for sale, sparking calls for state intervention to safeguard 16,300 jobs. It has been urged to renationalise the iconic industry that dates back to the 19th century and which once provided 40 per cent of the world's supply, but such a move is prohibited by the European Union.
