(MENAFN- AFP) Indian giant Tata Steel announced Monday the sale of a major British steel division employing 4,400 people, as it formally placed the rest of its steel assets in the country up for sale.
The government has been racing to find a buyer for Tata's assets -- and save 15,000 jobs -- after the company's shock announcement last month it was selling its British assets due to a global oversupply of steel, cheap imports into Europe, high costs and currency volatility.
Tata Steel said it had agreed to sell its Long Products Europe (LPE) division, whose chief asset is the Scunthorpe works in eastern England, to Greybull Capital, a British-based family investment office. Long products are items such as steel pipes that are sold by length.
"This transaction will offer a future for the LPE business and its 4,400 employees in the UK," said Hans Fischer, chief executive of Tata Steel's European operations.
Tata Steel is still looking for a buyer for the rest of its British assets including the Port Talbot steelworks on the south Wales coast, Britain's biggest steel plant, which employs 4,000 workers.
The LPE deal is expected to complete within eight weeks, subject to conditions being met.
LPE, which will be renamed British Steel, was sold for a nominal £1 ($1.40, 1.25 euros). Greybull said it is arranging a £400 million investment and financing package as part of the deal.
The money is provided mainly by a combination of banks and shareholders. The LPE sale also includes two mills, a port terminal, an engineering workshop and a design consultancy, all in Britain, as well as a mill in northeast France which employs 400 people.
After a fortnight of pressure from the opposition, trade unions and the press over the government's handling of the crisis, business minister Sajid Javid was to address lawmakers later on Monday on efforts to find a buyer for Tata's assets.
He flew to India last week to meet company executives and has said the government will make every effort to secure a serious buyer for the Port Talbot plant and other assets.
- Soaring Chinese imports -
"The board of Tata Steel Europe... has decided to commence the process of divestment of its entire shareholding in its subsidiary Tata Steel UK," the company said in a statement.
Fischer said the industry was facing "challenging market conditions in Europe with the soaring levels of imports from China".
Greybull said the existing LPE management team would stay and run the business.
Trade union members at Scunthorpe are being balloted on whether to accept a three percent pay cut and reduced pension contributions for a year to smooth the deal.
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.
He said the aim was to avoid redundancies and grow the operation.
"At its core, it is a very good business," he said.
Meyohas said the name British Steel was "world renowned" and had an "incredible heritage", but would not be drawn on whether Greybull was interested in buying other parts of Tata Steel's UK assets.
- Welsh plant losing money -
Metal processing company Liberty House is looking at the Port Talbot plant, though the group's president Sanjeev Gupta is not keen on taking on its pension and environmental liabilities, and wants relief from high energy prices.
Port Talbot is reportedly losing £1 million a day in the face of high energy costs and plunging prices caused by a chronic global oversupply of steel and a glut of cheap imports, particularly from China.
"We remain very interested in acquiring downstream -- steel processing -- activities, where we have a proven track record of achieving a positive turnaround," Gupta said, according to The Times newspaper.
He said he wanted to make "a sound judgement on what will be the most economical and sustainable operating model".
Business minister Javid hailed Monday's news as "a step in the right direction for the long-term future of British steel manufacturing in Scunthorpe."
"We will continue to work with Tata and Greybull and, as we have said, stand ready to provide funding on a commercial basis if required," he said.<
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