Tata Steel, says reports of UK plant sell to Klesch are speculative
19 May 2015
Reports that Tata Steel is about to sell its long products division to Klesch Group are 'speculative' and do not reflect the views of the company, the steelmaker told the National Stock Exchange on Tuesday.
Geneva-based Klesch Group, a global commodities business involved in chemicals, metals and oil production and trading, declined to comment.
Tata Steel, Europe's second-largest steelmaker, said in October it is in talks to sell its loss-making long products division, which employs 6,500 people mostly in the UK, to Klesch. News of the talks prompted a flurry of concern at the time in government circles.
Klesch has a record of swooping in on ailing businesses and is credited with bringing distressed debt investing -- or "vulture capitalism", as it is described by critics -- across the Atlantic.
Last week, Tata Steel said it expects to take a non-cash writedown of about $785.3 million chiefly relating to its long products division. The company reports results on Wednesday.
Tata Steel has been forced to slash costs and jobs since 2007 when it bought Anglo Dutch producer Corus for $13 billion. In 2013 it booked a write down of $1.6 billion, largely related to its European business.
Producing steel profitably in Britain is difficult given cheap imports, lacklustre post-financial crisis demand, high labour costs, depressed prices plus energy costs and green taxes that are some of the highest in the world.
The UK steel sector currently employs some 20,000 people directly, down from as much as 200,000 people in the 1970s.