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Turkish army pension fund set to buy British Steel

Steel production at British Steel's Scunthorpe plant Image copyright Getty Images

The Official Receiver is to announce this week that an investment arm of Turkey’s armed forces pension fund is the preferred bidder for British Steel.

Ataer Holding would then be given several weeks to try to buy British Steel – the owner of the Scunthorpe works – out of insolvency.

British Steel was put into compulsory liquidation in May, when the Official Receiver was appointed.

Ataer owns nearly 50% of Erdemir, Turkey’s biggest steel producer.

It is the investment vehicle of the Turkish Armed Forces Assistance Fund (known as Oyak), the pension fund for the country’s armed forces.

Some 5,000 jobs were put at risk – and 20,000 in the supply chain – when talks broke down in May between the government and British Steel’s owner, Greybull.

British Steel has about 5,000 employees. There are 3,000 at Scunthorpe, with another 800 on Teesside and in north-eastern England.

The company was transferred to the Official Receiver because British Steel, its shareholders and the government were not able to, or would not, support the business.

The Financial Times reported that Oyak is chaired by Mehmet Tas, a former army general, and its annual general meeting in May was attended by Turkey’s defence minister and the head of the country’s armed forces. 

It already has interests in cement, agriculture, mining and energy, as well as a joint venture with French carmaker Renault and revenues of $9.8bn (£8.1bn) last year.

Image copyright Getty Images

The paper said Ataer, established by Oyak in 2005, plans to embark on a spate of global steel acquisitions and considers buying British Steel a “bold” first step that would be a signal of intent.

Unite assistant general secretary Steve Turner said the union was meeting with the administrator on Thursday and that reports of a buyer were speculation.

“Unite understands from previous scheduled meetings that there are three serious bidders who are interested in buying British Steel as a going concern.

“With regards to the potential bid from the Turkish military pension fund. While we welcome it as a serious proposition, Unite will be watching this closely and speaking with our Turkish sister unions given Turkey’s record of repression alongside reported opposition to independent trade union organisation in its Turkish steel plants.”

Prof Barbara Shollock, head of engineering at King’s College London, told Radio 5 live’s Wake Up to Money that linking the Scunthorpe steelmaker with one in Turkey may make commercial sense.

“The British steel industry is highly regarded, the products that they make are high value and high quality… Perhaps joining in with a stronger European presence [the Turkish fund] might feel that they are consolidating their market and broadening their opportunities.”

She said it was a “challenging situation”.

“[Steel] is what we call a foundation industry and that means that it is one of the core producers of materials that feed into other manufacturing and key things like rail, automotive, construction even, so it is very important that we have strong foundations.”

State-owned Network Rail – which buys 100,000 tonnes of rails from British Steel each year – has said it wants to take over the British Steel division responsible for the welding, finishing and storing of rails for the UK’s train network, although it has said it would prefer a bidder for the whole company to be found.

Source: bbc.co.uk

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