British Steel Seeking Extra Support to Cope With Brexit
British Steel Seeking Extra Support to Cope With Brexit
(Bloomberg) -- British Steel Ltd., one of the U.K.’s largest steel producers, said it’s in discussions with the government for extra funding to solve a cash crunch caused by Brexit.
The money would be in addition to a 120 million pound loan ($156 million) granted by the government to cover the cost of meeting obligations under the European Union’s carbon trading program.
Sky New reported on Tuesday that the company has sought a 75 million pound loan and the government is drawing up contingency plans. The U.K.’s Business Department declined to comment.
"Discussions are continuing about a package of additional support to assist the company address broader Brexit-related issues," British Steel said in a statement.
British Steel, owned by private equity firm Greybull Capital LLP, found itself short of cash after the EU suspended the allocation of free permits to U.K. companies because of Brexit. The annual award is used by polluters to meet obligations in the program, but without it companies need to purchase the allowances on the open market.
Unite, a union representing steelworkers, urged the government to help.
"High energy costs are leaving steelmakers competing with their European competitors with one hand tied behind their backs," Tony Brady, the national officer for steel, said in an emailed statement. "Ministers need to support the wider steel industry with help on business rates and high energy costs."
The European steel industry as a whole is struggling with depressed prices and sluggish economic growth. ArcelorMittal, the world’s biggest steelmaker, has warned that the European steel market will be far weaker than expected this year as demand contracts and producers struggle against cheap imports.
--With assistance from Thomas Penny.
To contact the reporters on this story: Elena Mazneva in London at emazneva@bloomberg.net;Alex Morales in London at amorales2@bloomberg.net
To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Nicholas Larkin
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