The government has moved to rescue British Steel with a financial support package worth as much as £300m that ministers believe will be enough to secure backing from a private bidder.
It is understood that the Department for Business, Energy and Industrial Strategy (BEIS) has agreed to substantially increase support to bidders for British Steel, which employs more than 4,000 people, after months of wrangling following the company’s collapse into administration.
The rescue package will include beefed-up grants, indemnities and loans that could be worth as much as £300m, according to sources quoted by Sky News.
A Turkish pension fund is considered to be the frontrunner to takeover the company’s main plant in Scunthorpe and subsidiaries across Teesside, although a consortium which includes a leading civil engineering firm working in west Africa is also in the running after making a late bid.
Despite the late interest from elsewhere, the business secretary, Andrea Leadsom, is expected to approve exclusive talks with Ataer Holdings, a subsidiary of the Turkish military pension scheme Oyak. An announcement that Ataer has won preferred bidder status could be made by the government’s official receiver David Chapman and EY, which is managing the sale, as early as next week.
Ataer is believed to be the frontrunner after it committed to keeping all parts of the steel company together. While the plant in Scunthorpe makes up the vast majority of British Steel’s operations, the government has so far expressed a preference for selling the company as a single entity, including satellite operations in areas such as Teesside.
The government has already provided a £120m loan to British Steel to help meet its obligations under an EU carbon credits scheme for industrial polluters. Nevertheless, the firm is understood to be losing £5m a week.
The Guardian has approached EY and BEIS for comment.
Earlier this week, BEIS said: “This government will leave no stone unturned to get a good solution for British Steel at Scunthorpe, Skinningrove and on Teesside.”