Network Rail makes indicative offer for some British Steel assets

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By Reuters
Network Rail makes indicative offer for some British Steel assets
FILE PHOTO: A general view shows the British Steel works in Scunthorpe, Britain, May 21, 2019. REUTERS/Scott Heppell/File Photo   -  Copyright  Scott Heppell(Reuters)

By Bhargav Acharya

(Reuters) – Britain’s Network Rail said on Sunday it has made an indicative offer for some “railway critical” assets of British Steel, the country’s second-largest steel producer which went into liquidation last month.

State-owned Network Rail is a British Steel customer, buying about 100,000 tonnes of rails a year from the company, which was put into compulsory liquidation on May 22 after Greybull Capital, which bought it from Tata Steel <TISC.NS> three years ago, failed to secure extra funding.

The company has been open for bids from potential buyers until an extended deadline of June 30, and the office handling British Steel’s liquidation said in May that around 80 companies had been given access to the books.

“We have made an indicative offer for some railway critical assets although our overwhelming preference is that a purchaser for the entire business is found,” a spokesperson for Network Rail said in an emailed statement.

The railway infrastructure operator is working with British Steel’s liquidator, the spokesperson said, adding that it was ‘very clear’ that Network Rail’s offer would not undermine its preference of British Steel being sold in its entirety.

A closure of British Steel, which produces high-cost long steel products used in construction and rail networks, would jeopardise 25,000 jobs, including 5,000 in Scunthorpe, northern England.

Banking and industry sources told Reuters on Friday that the company has attracted interest from up to nine possible buyers, but far fewer firm bids were expected by an extended June 30 deadline.

Sources previously told Reuters that none of the potential buyers would be willing to take on the whole company, even for a nominal sum, due to the need for capital expenditure to make it profitable after years of underinvestment.

The Daily Telegraph reported that Network Rail submitted a letter of intent on Friday to buy British Steel’s rail service centre business, responsible for the welding, finishing and storing of rails for UK’s train network.

British Steel did not respond to a request for comment.

(Reporting by Bhargav Acharya and additional reporting by Ismail Shakil in Bengaluru; editing by Jonathan Oatis and Alexander Smith)