Greybull signs deal to acquire Scunthorpe steelworks

File photo dated 20/05/2011 of a general view of the Tata Steel Plant, Scunthorpe, as hundreds of millions of pounds is to be invested in the Welsh steel industry over the next five years, it was revealed today. PRESS ASSOCIATION Photo. Issue date: Monday April 16, 2012. The First Minister of Wales returned from a trade mission to India and announced that steel giant Tata plans to invest �800 million in Wales. See PA story INDUSTRY Invest. Photo credit should read: Anna Gowthorpe/PA Wire
File photo dated 20/05/2011 of a general view of the Tata Steel Plant, Scunthorpe, as hundreds of millions of pounds is to be invested in the Welsh steel industry over the next five years, it was revealed today. PRESS ASSOCIATION Photo. Issue date: Monday April 16, 2012. The First Minister of Wales returned from a trade mission to India and announced that steel giant Tata plans to invest �800 million in Wales. See PA story INDUSTRY Invest. Photo credit should read: Anna Gowthorpe/PA Wire
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Tata Steel today announced the signing of an agreement to sell its Long Products Europe business to Greybull Capital.

Greybull Capital, the British-based family investment office, has reached a binding sale and purchase agreement with Tata Steel to acquire its Long Products Europe division based in Scunthorpe. The transaction includes the LPE steel works in Scunthorpe, two mills in Teesside, an engineering workshop in Workington and a design consultancy in York along with a mill in Hayange, France. The transaction includes LPE’s associated sales and distribution network. Following completion of the deal, LPE will trade under the brand name British Steel.

The deal is expected to complete within eight weeks, subject to certain conditions being met. These include the satisfactory completion of the financing arrangements for LPE.

As part of the deal, Greybull is arranging a £400m investment and financing package for the new business. The financing, provided principally by a combination of banks and shareholders, will be available to fund working capital and future investments. An agreement to reset the cost base of the business has been reached with key suppliers and trade unions, Greybull said.

A Greybull spokesman said: “The existing management team will stay and run the business, implementing the plan that they have drawn up to return the company to profitability. The search for a permanent CEO has started and an appointment will be made in due course. “

Commenting on behalf of Greybull, partner Marc Meyohas said: “We are delighted to have reached agreement for the acquisition of LPE, which we believe can become a strong business, with a highly skilled workforce and great potential. I would personally like to thank Tata Steel, the trade unions and the British and French Governments for their support, which was essential in ensuring the agreement. We are now focused on taking the deal to completion in order that the business can start its next chapter with confidence.”