Welsh billionaire Terry Matthews backs Tata Steel UK buyout plan

Sir Terry Matthews, the first Welsh billionaire, is backing a proposed management buyout of Tata Steel UK, boosting hopes of a rescue deal for the Port Talbot steelworks and thousands of employees.

The Guardian is reporting that Matthews is helping to put together a consortium of public and private sector figures from south Wales who can support the buyout. Other figures in the consortium include Simon Gibson, the chief executive of Matthews’s investment vehicle Wesley Clover, and Steve Phillips, the chief executive of the Neath Port Talbot county borough council.

Phillips said: “We are all like-minded people who believe that the UK steel industry has a future. The MBO [management buyout] deserves the opportunity to be heard.

“At the moment, we are in the process of registering our interest. This is a serious option, but we are not saying we have all the answers and this is not without risk.’

It is not yet clear whether Matthews is willing to fund a rescue of Port Talbot and Tata’s UK business or is just helping to drum up support. Matthews is chairman of the Swansea Bay City Region, a partnership between businesses and local authorities. The entrepreneur, now based in Canada, is understood to be flying into the UK to holds talks.

Phillips said work on the funding of the proposals was at an “exploratory stage”. The consortium held talks at the Celtic Manor resort in south Wales, which is owned by Matthews, earlier this week.

Matthews is the third-richest man in Wales and made his fortune in technology and telecoms. He has founded or funded more than 100 companies, including comms business Mitel. Matthews is also credited with bringing the Ryder Cup to Wales after the golf tournament was held at Celtic Manor in 2010.

The plan for a management buyout has been drawn up by Stuart Wilkie, the managing director of Tata’s strip products business, which includes Port Talbot.

The news that Matthews is backing Wilkie’s proposals gives the management buyout plan greater credibility. It could be the best hope of securing the future of the Port Talbot steelworks.

Sources close to Tata have warned there is a lack of interest in buying its entire UK business, which is losing £1m a day. They have also played down the potential of Wilkie’s turnaround plan, which was presented to the company’s board last month in last-ditch attempt to stop it pulling out of the UK. One source said: “If it was credible then they [Tata] would have done it before.”

Wilkie is reported to have asked staff interested in his plans to contribute up to £10,000 towards funding a deal. This offer could be extended to the 130,000 members of the British Steel Pension Scheme.

The consortium also is thought to be pushing the government for support. It is keen for any management or employee buyout to enjoy tax breaks that it claims would be available for venture capitalists.

Sajid Javid, the business secretary, has said the government was willing to co-invest with a potential buyer, meaning it could support a management buyout. Javid was in Mumbai on Tuesday holding private talks with Tata.

A spokesperson for the Department for Business, Innovation and Skills said: “We are doing everything we can to help the steel industry secure a long-term viable future and welcome any interest from potential bidders.”

Other potential bidders for Tata Steel UK include Liberty House, Sanjeev Gupta’s metal company; Greybull, the investment firm that is buying Tata’s steelworks in Scunthorpe; and ThyssenKrupp, the German industrial conglomerate.

Trade unions welcomed news of the consortium’s interest but said they had yet to be contacted.

A spokesperson for Community, the steelworkers’ union, said: “We welcome interest from all credible potential new owners. We are aware of reports that a management buyout is under consideration and would expect discussions with anyone considering leading such an initiative.

“We are still in the very early stages of the sales process; however, it is clear that significant interest in the business exists from a number of different potential buyers. This is a sign that a long-term, profitable future for the industry is entirely possible.”

About 40,000 jobs are at risk after Tata announced last month that it would pull out of the UK steel industry. The figure includes 15,000 jobs at Tata and 25,000 in the supply chain.

The management buyout would activate a turnaround plan for Port Talbot known as “the bridge”. It involves £100m being injected into the business immediately. It would keep open the blast furnaces at Port Talbot, a key consideration for the government, and take 18 months to two years to get the business back into profit.

Tata Steel has approached almost 200 parties about potentially bidding for the business. It has declined to reveal the identity of interested parties, as has the government.

In a statement on Wednesday, Tata said: “Tata Steel Europe welcomes credible expressions of interest for Tata Steel’s UK operations. It is our policy that we are not naming, confirming or commenting on any potentially interested investor or bidder at this point.

“All expressions of interest, including any management buyout proposals, will be considered when received. In the interests of all stakeholders every credible expressions of interest will enter the same rigorous assessment process to ensure the best value and prospects of sustainability.”

Photograph: Alamy

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