British Steel: provisional deal with Turkish bidder could save 4,000 jobs

Full transfer of ownership to pension fund Oyak expected to take place before end of year

The Turkish military pension fund Oyak has entered exclusive talks over a rescue deal for British Steel that could save more than 4,000 jobs, after months of talks with the government.

Trade unions and Labour welcomed progress on sale talks but said they were seeking assurances on Oyak’s attitude to labour rights, amid concern about its track record in Turkey.

Oyak’s subsidiary, Ataer Holding, will have two months to perform due diligence on British Steel, which collapsed into insolvency in May. A full sale is expected before the end of the year.

The Turkish company has yet to reveal the finer details of its plans, but told the government that it wanted to inject £900m into the Scunthorpe steelworks to more than double its output. The plant is where most of British Steel’s staff work.

The business secretary, Andrea Leadsom said: “This is an important and positive step forward in securing the future of British Steel.

“I said that no stone would be left unturned in our efforts to find a suitable buyer for the whole company and we have worked tirelessly to support the official receiver to do that.

“I want to thank British Steel’s employees for their continued dedication and hard work throughout, which I saw first-hand when I visited Scunthorpe recently.

“The UK has a long and proud history of steel manufacturing and I am committed to a modern and sustainable future for the industry that is productive and supports a skilled and highly valued workforce.”

Andrea Leadsom
The business secretary, Andrea Leadsom, says she is ‘committed to a modern and sustainable future for the steel industry’. Photograph: Anthony Harvey/Rex/Shutterstock

The official receiver David Chapman, who is handling the sale alongside the accountancy firm EY, said: “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.”

On Thursday, the Guardian reported that Oyak was accused of corruption by a Turkish parliamentary commission, and jointly owns a Renault car plant where striking workers were allegedly mistreated.

Oyak declined to comment but said it had high standards of transparency and has no involvement in management of the car plant.

Turkey’s president, Recep Tayyip Erdoğan, has been accused of being an autocratic leader intolerant of dissent. The country has Nato’s second largest armed forces, whose retirement income is Oyak manages. The fund is chaired by a former army general.

In the UK, the shadow business secretary, Rebecca Long-Bailey, said: “Given the company’s track record, Labour will hold the government to account if there are any moves to undermine the unions and workers’ terms and conditions.”

Rachel Reeves, a fellow Labour MP who chairs the business select committee, said she would ask Ataer to explain its “plans for the workforce” as part of an inquiry into the future of the UK steel industry.

A spokesman for Unite said it was talking to its sister unions in Turkey and would be “scrutinising the labour and human rights records of Oyak operations carefully.”

Roy Rickhuss, the general secretary of steelworkers’ union Community, said: “The high-quality jobs of the existing workforce must be secured to support the 25,000 families in north Lincolnshire and the north-east that depend on British Steel for their livelihoods.”

Ataer was widely expected to be the preferred bidder after promising to keep British Steel’s operations together, rather than seeking to cherrypick the best assets. The government also committed to providing a £300m support package of grants, indemnities and loans in an efforts to push through the deal.

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Oyak, based in the Turkish capital, Ankara, is thought to be paying paid £70m for British Steel.

The £15bn pension fund staved off competition from Liberty House, the UK-based conglomerate run by the Indian-born businessman Sanjeev Gupta. Greybull Capital, the private equity owner of British Steel when it collapsed, was also interested in buying back parts of the business.

Toker Özcan, Oyak’s head of mining and metallurgy, said: “The acquisition of British Steel under the Ataer umbrella is the first step in the future plans of our group. Our priority will be to increase the production capacity and to invest in clean steel production in British Steel.”

In a statement on its website, Oyak described the potential deal as “one of the biggest achievements of the Turkish steel industry”.

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Rob Davies and Jasper Jolly

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