Support worth hundreds of millions outlined for potential Tata steel buyers

A train carries molten iron in front of the steel factory building at the Tata steel plant in Port T

A train carries molten iron in front of the steel factory building at the Tata steel plant in Port Talbot. Picture: Ben Birchall/PA Wire - Credit: PA

A package of support worth hundreds of millions of pounds will be made available on commercial terms to potential buyers of Tata Steel, the UK and Welsh governments have announced.

The move followed another visit to Mumbai by Business Secretary Sajid Javid to meet Tata's chairman Cyrus Mistry on Tuesday where the minister said progress on the sales process had been made.

The Business Department said the financial support package will be tailored to the purchaser's strategy and financing needs.

It is expected that all, or the large majority, will be through the provision of debt financing. Other options include providing hybrid (convertible debt) or alternative forms of financing and supporting a purchaser's financing by taking a minority equity stake of up to 25pc to support any sale.

The government said it was actively working with Tata Steel and the British Steel Pension Scheme's trustees to find a solution that will help minimise its impact on a potential purchaser, and potentially separate it from the business.

Mr Javid said: 'This government is committed to supporting the steel industry to secure a long-term, viable future and we are working closely with Tata Steel UK on its process to find a credible buyer. The detail of our commercial funding offer is clear evidence of the extent of that commitment.

'Ministers have visited Tata Steel sites across the country and the pride and dedication of the highly skilled men and women working there is obvious to see. We have already delivered on energy compensation, on tackling unfair trading practices and on procurement of British steel, and we will keep on going further to support this vital industry.'

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First Minister of Wales Carwyn Jones said: 'We're committed to supporting any credible bid to secure steel making in Wales. We have worked with the UK government to put in place this significant package of support and we believe that this will help secure a successful sale of Tata Steel's operations in Wales and the rest of the UK.'

Today's announcement follows the start of a formal sales process of Tata's loss-making UK assets.

In addition to the support package, the UK and Welsh governments said they will also be willing to consider additional grant funding support, for example to support the development of power plant infrastructure, energy efficiency and/or environmental protection measures, R&D and training.