Excalibur Management Buyout Confirms Bid Plans For Tata Steel

4 May 2016

The Excalibur Steel consortium hoping to secure a management buyout of Tata’s UK steel assets has confirmed it plans to bid for the business, while Albion Steel, a start-up led by industry veteran Tony Pedder has said in intends to bid for the Tata's speciality steel unit.

Excalibur is led by Stuart Wilkie, the boss of Tata’s strip steel operations in Britain, who has taken a leave of absence from the business to run the bid.

Members of the consortium – which is backed by Welsh billionaire Sir Terry Matthews – confirmed this afternoon they have registered a "letter of intent" with Tata expressing their formal interest in taking on its UK steel assets.

Mr Wilkie said: "This project has made enormous advances in a very short period. It was only two weeks ago we made the decision to pursue a buy-out that enables the management and staff to take a stake in the ownership and operation of a strategic British industry.

"We believe we have a large number of the pieces in place required to make this a success, including a management team with vast experience of steel making and processing. We are confident we can turn the business around and sustain profitable steel-making in the United Kingdom, including both the down-stream and up-stream operations."

Tata is understood to have set of deadline of Tuesday evening for potential buyers to formally express interest in bidding for either all or parts of its loss-making UK steel operations, which employ 11,000 people.

Excalibur – based out of Sir Terry’s Celtic Manor hotel complex in Newport - is understood to be considering a variety of proposals though the most likely scenario is that vehicle will buy the giant Port Talbot integrated steelworks and related businesses.

A spokesman for Excalibur said: “We are looking at the UK operation but there are some parts of Tata’s business which have stronger synergies than others.”

Sources close to the sales process say that this signals that Excalibur is not interested Tata’s Yorkshire-based speciality steels business, which supplies the aerospace and energy industries and employs about 2,000 staff.

As well as industry veteran Mr Wilkie as its chief executive, Excalibur has bolstered its board. Roger Maggs, a member of the Port Talbot Waterfront Enterprise Zone, is chairman; Simon Gibson, chief executive of Sir Terry’s Wesley Clover investment fund, is a non-executive director; and former Warburg investment banker Mark Rhydderch-Roberts has taken a similar role.

Excalibur is looking at several ways of funding its bid. It is considering an employee subscription with Tata staff handing over part of their wages in return for a stake in the business. Investors who take a stake could be offered tax relief, although this could require legislative changes.

The Government’s pledge to take an equity stake of up 25pc alongside a new buyer is also understood to be a necessary part of Excalibur’s plans.

Albion Steel, whose directors include experienced steel executives Rod Beddows and Mike Walsh, also confirmed it has registered its interest.

The business, which was set up to bring new "mini-mill" steel manufacturing technology to the UK, is developing its business plan and securing investment. It wants to buy the speciality operations and combine them with its current plans.

Mr Beddows said: "The recent Tata problems highlighted an unexpected opportunity to combine the Albion concept with the Tata Steel speciality steels business in an innovative structure which may potentially include other metals producers in the region.

“ This opportunity is a complex one which has best prospect of successful execution if Tata is prepared to approach its disposal plans in a different way and to engage strategically with Albion and other interested parties to seek a negotiated structure.”

Liberty House, the commodity trading business headed by Sanjeev Gupta, has already confirmed it will bid for Tata's steel operations, a development which was first reported by the Telegraph at the weekend.  

The move by Excalibur came as business secretary Sajid Javid postponed a trade visit to Iran to focus on the UK steel industry.

A spokesmen for Mr Javid said: "Given the business secretary's focus on the steel industry, he has decided to postpone his trip to Iran. He remains committed to exploring the opportunities for trade and investment with this emerging market."

Mr  Javid has come under fire for his handling of the steel crisis, which has cost thousands of jobs already as British producers buckle under the pressure of high energy costs and taxes, combined with a flood of cheap imported steel from China.


Source : telegraph.co.uk