Excalibur Steel UK, the company proposing a management buyout of Tata Steel UK, has said the takeover could lead to more job losses. Excalibur, which is currently led by Stuart Wilkie, the boss of Tata's strip steel operations in the UK, has the backing of Welsh billionaire Sir Terry Matthews.
Excalibur explained that upon the takeover, the UK business of Tata Steel would undergo a reorganisation considering it was earlier being run as part of a bigger group which had other plants in Europe. "The opportunity for greater efficiency involves evolving from a highly functional centralised business model, with significant fixed costs and overheads. This arises because the existing arrangements are based on a pan-European structure," it said.
"Excalibur's proposals will see a migration towards leaner autonomous sub-business units. In the event Excalibur is successful in acquiring Tata's UK steel assets, this will inevitably take some time to achieve. Potentially this could affect up to 1,000 jobs across the entirety of the operation," the possible buyer added.
The job losses are over and above the 1,000 job cuts which Tata Steel had announced before the business was put up for sale. In response, Roy Rickhuss, general secretary of the Community union, said: "We have had no discussions with Excalibur about additional job losses. We wait to see the details of their plans for the business and any implications for jobs."
Excalibur seeks to raise £300m (€379.4m, $433m) via debt and equity to finance the acquisition. While it has already discussed its buyout plans with one British and three international banks, Wilkie said the company expects to secure necessary lines of finance by the end of next week. He expected the UK government to keep its promise by contributing 25% of the funds required for the takeover.
Excalibur aside, Sanjeev Gupta's metals group Liberty House is also keen on acquiring Tata Steel's UK business which includes the UK's biggest steel plant at Port Talbot in south Wales. Both the companies have submitted their letters of intent to buy.
The current owner, India's Tata Steel, said it would start looking at the offers. The company which has connected with 190 potential buyers for the Port Talbot plant is said to be hoping for a quick sale. It has not set a public deadline for the deal to close.