A private equity firm is understood to be considering a wide-ranging restructuring programme as part of a potential deal that could save thousands of steel industry jobs.
Greybull Capital is in talks with Tata Steel about a possible rescue package for Tata’s long products business, which is based in Scunthorpe and employs 4,700 people across Europe.
According to the Sunday Telegraph, it is understood that Greybull intends to undertake a wide-scale restructuring that would see costs including its pension scheme, overtime and bonuses scaled back.
The firm wants to replace the workers’ defined benefit pension scheme with a defined contribution plan, the report said.
Last month, Tata signed a Letter of Intent with Greybull Capital for the potential sale of its long products business.
The move has led to exclusive negotiations with the investment firm and covers several UK-based assets including the Scunthorpe steelworks, mills in Teesside and northern France, an engineering workshop in Workington, and a design consultancy in York.
Unions welcomed the announcement, following a spate of job losses in the steel industry and fears for the future of Tata’s long products business.
A Tata steel spokesman confirmed yesterday that talks are continuing with Greybull about the long products division. A Greybull spokesman declined to comment on the Sunday Telegraph article.
It was also reported that the Department for Business is understood to be considering a loan as part of a takeover of the Scunthorpe site by Greybull.
The report in The Sunday Times said the support could come from the Government’s Exceptional Regional Growth Fund, a pot used to “respond quickly to economic shocks.”
A Department for Business Innovation and Skills (BIS) spokesman said he wouldn’t comment on commercial matters.
The spokesman added: “The Government continues to engage closely with Tata on how we can help during this difficult period.”
The BIS spokesman said the Government has taken “clear action” to help the industry, through a series of measures, including cutting energy costs, and by taking action on imports, Government procurement and EU emissions regulations.
There are also fears that Tata is planning to announce around 1,000 job cuts at plants including Port Talbot and Llanwern in south Wales, which will increase pressure on the Government to support the steel industry.
Thousands of job losses were announced last year, with companies blaming high energy costs and cheap Chinese imports.
Tata and the steel unions made no comment on the report.
But sources told the Press Association that an announcement was imminent, with the majority of job cuts expected to be at Port Talbot, which employs more than 4,000 workers.
Many contractors and service firms rely on the plant, so direct job cuts will have a knock-on effect across the region.
The Government responded to the crisis by holding a summit last year and pressing the European Union to help high energy using firms.
But unions believe more should be done to support the troubled sector.
A Tata Steel spokesman told The Yorkshire Post: “We have no announcement to make at present.
“If we have significant news we would always tell employees first.”