The Chinese steelmaker Jingye Group announced their buyout British Steel out of liquidation effective in a couple of days. The company also promised that it would allow access to loans, grants, and indemnities worth £300 million. The effect thereof would significantly increase the company's production.
The deal between British Steel and Ataer, the latter being the investment aid of Turkey's military pension, was suspended. The latter fell to third place during the bidding for British Steel and that of the UK-based Liberty House group.
Initially, the Turkish deal had completed a preliminary agreement and was signed by Ataer last August. The signing signified the acquisition, but the deal was halted last month. The parties could not agree to the terms and the UK industry had been struggling to find alternative sources to cheaper steel. It was then that British Steel found a deal with Jingye Group.
Jingye Group won the bid and promised to acquire British Steel with a level of financial support upon finalization. According to Railway Technology, the United Kingdom government would aid the buyer through loan guarantees and other sources of financial support to push the deal through.
The agreement between Jingye Group and British Steel would be finalized through signing. The company would also be run by an Official Receiver for at least one month before it would be turned over.
It was further explained that the no-buyout deal would have a knock-on effect on British Steel's suppliers and would significantly affect those that purchase their products.
It was reported that Network Rail is among those that manage 20,000 miles of rail tracks in that country. The company is expected to buy up about 97 percent of the steel used. If a collapse would incur, Network Rail may look to other European suppliers which would cost them more.
According to BBC News, the rescue deal with Jingye Group comes with a £70 million financial support. It has been run by the government since May awaiting its liquidation.
The deal would also open doors to 4,000 employees who reside in Teesside and Scunthorpe. The added number of manpower adds up to the additional 20,000 jobs that would be created under the deal's supply chain.
It was also reported that Jingye Group also considered the possibility of increasing British Steel's production in the Scunthorpe site to more or less by 500,000 per year. There is, however, a threat that the China-US deal may increase the tariff rates of steel imports from China to the European Union.
