UK Consulting With Turkish Firm Cengiz For Sale Of British Steel If Deal With Jingye Fails

Talks with the Turkish conglomerate Cengiz Holdings is being held by the British government to convince the firm to purchase British Steel is the planned acquisition of the steel company by Chinese industrial firm Jingye does not go through.

However reports suggested that the government is confident that the acquisition of British Steel, including the Scunthorpe steelworks, for £50m by Jingye will get completed in the next few weeks which will keep about 4,000 workers of the steel company employed.

But a back-up plan relating to the Istanbul-based Cengiz is being explored by the Department for Business, Energy and Industrial Strategy (BEIS) of the United Kingdom.

There were no comments available from BEIS declined.

The preferred bidder status of Jingye gives it the sole right to negotiate the acquisition with the official receiver who is a government employee in charge of managing the sale and helped by accountancy firm EY.

However the exclusivity clause is not binding on BEIS and therefore it seeks to take as little time as it can in owning a business that was declared insolvent about eight months ago. British Steel is facing daily losses of about £1m.

There are hurdles to achieving a deal with Jingye which includes tough negotiations with the suppliers of British Steel as well as questions raised by the trade unions about security of jobs and employee benefits post the deal.

The sale of British Steel’s Hayange plant near the border with Luxembourg also requires an approval from the French government.

The officials at the BEIS are looking out for alternatives even though they are confident that the hurdles to the deal with Jingye will be overcome. BEIS is also keeping in mind that one potential buyer of British Steel has already declined to a deal.

Following the breakdown of a deal with Ataer Holdings, a unit of the Turkish military pension fund Oyak, the status of a preferred bidder was awarded to Jingye which is led by the former Communist party official Li Ganpo.

Reports also claimed that that the Turkish government favors a deal with Cengiz, which has connections to the state, instead of one with Oyak despite it possessing links with the Turkish government and military.

Mehmet Cengiz, the founder and owner of Cengiz is believed to be close to Turkish President Recep Tayyip Erdoğan and a host of major infrastructure projects has been awarded to Cengiz. Contracts for dams and power generation, a high-speed rail project, Istanbul’s new airport and the Black Sea coastal highway are some of the mega projects that the company is working on currently.

Reports also said that the friendly relations between the UK’s steel minister, Nadhim Zahawi, and the Turkish government could also be beneficial to any possible negotiations with Cengiz.

“The government remains completely committed to getting a good solution for British Steel’s valued employees at Scunthorpe, Skinningrove and on Teesside. In November the official receiver accepted a bid from Jingye for British Steel, which is an important step towards securing the future of the steelworks and its employees in the UK,” said a BEIS spokesperson.

(Adapted from TheGuardian.com)

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