British Steel raises funds as it seeks ‘permanent solution’

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British Steel

British Steel says it has raised fresh funds from its backers as it seeks a “permanent solution” to its financial troubles.

It comes after the firm admitted on Tuesday it needed further financial support from the government to help it address “Brexit-related issues”.

Reports have suggested the steelmaker needs up to £75m or it could go bust.

But on Thursday it said it had the backing of shareholders and lenders and that operations continued as usual.

A British Steel spokeswoman said: “As the business navigates the significant uncertainties caused by Brexit, and explores options to strengthen the business for the long term, we are pleased to confirm that we have the required liquidity while we work towards a permanent solution.”

British Steel is the UK’s second largest steel firm, employing 4,500 people and about 20,000‎ indirectly via its supply chain.

In April the firm was forced to borrow £100m from the government to pay an EU carbon bill, so it could avoid a steep fine.

However, concerns about its future were raised this week after Sky News reported that insolvency experts had been lined up in case the firm could not secure further government funding.

It is understood that along with administration, nationalisation or a management buyout are being discussed as fall-back options for the company.

The firm will sit down for more talks with the government tomorrow.

Weak pound

British Steel’s troubles have been linked to a slump in orders from European customers ‎due to uncertainty over the Brexit process.

The firm has also been struggling with the weakness of the pound since the EU referendum in June 2016 and the escalating trade US-China trade war.

Private equity firm Greybull Capital rescued Tata Steel’s long products business during the depths of the steel crisis in 2016, saving more than 4,000 jobs.

It has since rebranded the company as British Steel and recently returned it to profit.

The concerns come days after Tata signalled its planned merger with German rival Thyssenkrupp was off, raising fresh doubts about its Port Talbot site.

Tata, which admitted it is facing tough operating conditions in the UK, promised to keep its UK plants running, but only if they could be profitable.

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