Tata bidder UK’s Excalibur Steel may cut 1000 jobs

The Dollar Business Bureau

Excalibur Steel UK Ltd, one among the potential bidders of Tata’s steel business in UK, is planning to cut another 1,000 jobs if it is successful in the bidding process. This is in addition to the 1,000 jobs already declared by Tata management earlier. Excalibur and Indian tycoon Sanjeev Gupta’s Liberty House are the two potential buyers.

To free itself from the burden of £1 million losses per day, Tata Steel is expecting a quick sale of its UK steel business. It is waiting for receiving letters of intent from the prospective buyers. It held talks with 190 potential bidders for its biggest plant in the UK - Port Talbot in south Wales, where around 4,000 people work on site. Though Tata has not set a deadline for the deal, it does not want to extend the uncertainty for its workers.

Excalibur would be planning to diverse the operations into small independent units to handle efficiently. It said that the reorganisation is needed as the present business is being operated as a part of a pan-European establishment.

“The opportunity for greater efficiency involves evolving from a highly functional centralised business model, with significant fixed costs and overheads,” it said in a statement.

Roy Rickhuss, General Secretary of Workers Community Union said that the situation is worrisome for steelworkers. Till now, Excalibur didn’t hold any discussions with the workers over the issue of additional loss of 1,000 jobs. The workers are waiting for the details of their plans for running the business and further its implications on the jobs.

“Excalibur is looking towards the banks to raise 65 percent of the funds required to finance the deal. While 25 percent of the cost is expected from the British government, the remaining money would come from Tata Steel employees,” said Stuart Wilkie, Director of Tata Steel at Port Talbot, who leads Excalibur now.

He said that the group will meet with a British bank and another three global banks to present its plan. By next week, the group may secure the required finance for the deal.

In the process of exiting from the loss making steel business, Tata Steel has sold its Scunthorpe plant to Greybull Capital LLP in April. The British government has earlier announced that it will buy a stake in the rescue plan for Tata Steel. Its UK assets include plants at Llanwern, Newport, Wednesbury, Walsall, Caerphilly, Shap, Stocksbridge, Shotton, Warwick, Corby, Brinsworth, Rotherham, Hartlepool and Trostre.