Chinese Jingye Group is leading contender for British Steel buyout

2019-11-06

Nov. 6, 2019 - Chinese Jingye Group bidding to save British Steel has promised never to sell the UK company if its rescue plan succeeds. 

Jingye Group has also vowed to ramp up production at the Scunthorpe steelworks and pour as much money into the ailing plant as it needs to keep going. 

The firm has emerged as the surprise front-runner to buy British Steel, which went bust in May, leaving thousands of jobs hanging in the balance.

It is understood to have pulled ahead of Sanjeev Gupta’s Liberty House and Ataer Holding – an arm of Turkey’s military pension fund – after impressing officials in meetings and presentations that were held in Britain last week.

Jingye is aiming to strike a deal with the Government by the middle of this month, according to reports.

However, fears remain that plans to save British Steel may still come to nothing, pushing the company out of business, which would be a blow to its 5,000 workers and another 20,000 in the supply chain.

In a presentation delivered to UK officials on October 29, Jingye chairman Li Ganpo appears to offer to write a blank cheque. A slide seen by the Mail read: ‘Jingye will invest to improve the equipment, boost the efficiency and increase the production for British Steel.

‘All equipment must be in good condition. Need funds? No problem. Jingye is here to invest.’ Ganpo said if the merger is successful, British Steel ‘will not only be part of Jingye but also part of my life’.

And he said if Jingye can work its way up from having no steel production in a barren area of China in 1994 to producing 15million tons of steel a year now, it is well-placed to make a success of Scunthorpe.

Another slide said making British Steel a success is Jingye’s ‘clear mission’ and added: ‘We will never sell British Steel to another buyer.’

And the presentation also revealed plans to increase annual output from 2.5million tons of steel per year to 3million tons or more.

But Jingye warned that to be profitable ‘it must cut costs’ – and said minimising costs in the supply chain could be the best method to do this. British Steel was put into compulsory liquidation in May when talks between its former private equity owner, Greybull Capital, and the Government fell apart.

The Government loaned the company £120million at the beginning of May but turned down a request for a further £75million, and British Steel collapsed soon after. It has since been kept afloat by taxpayers.

The Official Receiver, a Government employee placed in charge of British Steel while a buyer is found, said that more than 80 groups had expressed an interest in the firm and that 60 had looked at detailed financial documents before making a firm bid. Jingye could not be contacted for comment.

In a presentation delivered to UK officials on October 29, Jingye chairman Li Ganpo appears to offer to write a blank cheque. A slide seen by the Mail read “Jingye will invest to improve the equipment, boost the efficiency and increase the production for British Steel. All equipment must be in good condition. Need funds? No problem. Jingye is here to invest.”