Jingye’s Purchase of British Steel Assets at Risk: Telegraph

(Bloomberg) --

Jingye Group Co.’s planned acquisition of the assets of troubled steelmaker British Steel is at risk of falling through, the Sunday Telegraph reported.

Discussions with the Chinese steel conglomerate are under threat as a deadline to finalize the terms nears, the newspaper said, citing unidentified sources. Officials and accountants are in informal talks with alternate buyers, the Telegraph added. In a separate report, the Sunday Times said that capital controls being imposed on Jingye by the Chinese government could upend a final deal.

Jingye reached an agreement in November to buy the assets, ending months of speculation about the future of the troubled company. They include the company’s Scunthorpe plant along with other assets in the U.K., France and the Netherlands. The breakdown of talks could threaten 4,000 steelworker jobs, the newspaper said.

The deal remained subject to matters including regulatory approvals, but was aiming to be completed “as soon as reasonably practicable,” the U.K. Insolvency Service said last month. The British steelmaker, which has struggled in the face of weak steel demand and surging costs, was put into liquidation in May.

A spokesperson for the U.K.’s official receiver said by email that the parties have been working to complete the deal since the November agreement and that it isn’t speaking with other parties. The government will keep the business trading and supplying customers while regulatory approvals are obtained.

Should the talks with Jingye collapse, the government hopes to convince Sanjeev Gupta’s Liberty House industrial group to step in, the Telegraph said.

A spokesman for Liberty declined to comment. Jingye and British Steel didn’t immediately reply to requests for comment outside of normal business hours.

--With assistance from Gregor Stuart Hunter.

To contact the reporter on this story: Megan Durisin in London at mdurisin1@bloomberg.net

To contact the editors responsible for this story: Lynn Thomasson at lthomasson@bloomberg.net, Ian Fisher, Tony Czuczka

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