Brexit Blow: Tata Steel to Put its UK Assets Sale on Hold
MUMBAI: Tata Steel to Put its UK Assets Sale on Hold – Tata Steel (BSE 0.54 %), India’s largest private steel maker is likely to defer the plan to sell its steel business in UK after the exit of Britain from European Union commonly termed as Brexit raised concerns of the viability of steel business. The same was stated by two people familiar with the development. Tata Steel to Put its UK Assets Sale on Hold
“Brexit vote has added to the uncertainty of the sale process by raising questions about viability of the UK steel industry in general and the selloff bid in particular,” one of the persons said.
On Friday, Tata Steel board will hold a meeting to discuss the plan and Tata Sons chairman Cyrus Mistry, along with the board members, will meet Sajid Javid , the British business secretary who will fly down to India.
“Sale of most of the UK business including its largest plant Port Talbot will be stalled. However the plants making speciality steel in Hartlepool, Rotherham and Stocksbridge could be up for sale, said a report by BBC quoting unnamed sources.”
The report further added that about 2000 people are employed by these factories together and the steel giant in UK employs 15,000 employees. However, the Britain’s largest trade union, Unite, sent an alert to the company notifying the company not to conduct a ‘fire sale’ of its speciality steel business while allowing Port Talbot and its UK strips business to ‘wither on the vine’.
Harish Patel, national officer of Unite said said, “We will be pressing Tata for clarity over its intentions and ensuring it sticks to its promise to be a responsible seller and act ethically. We would urge Sajid Javid to do the same when he meets with the Tata board in Mumbai.” As per reports, Tata Steel has shortlisted 3 of the 7 bids for its UK assets.
“The company’s loss-making unit is saddled with a huge liability of British Pension Scheme for its 1.4 lakh employees including the present and retired employees. The pension scheme has assets of 13.5 billion rounds, its trustees say, and a deficit of about 500 million pounds.”
“As the trust invests in various financial instruments, any deficit will have to be borne by Tata Steel. The British pound witnessed a 31-year low crashing below 1.30 a dollar and the devaluation will add to Tata Steel’s pension contribution to the pension scheme. “
“Further Tata Steel shares closed at Rs 317.65 down by 4.92 per cent on Thursday.”