admin A Turkish steelmaker owned by the country’s military pension fund is advancing plans for a takeover of British Steel that would involve keeping its Scunthorpe plant open.
City sources said on Friday that the Turkish group had submitted a proposal for the whole of British Steel and was keen to agree a transaction in the coming weeks.
Erdemir, which is largely owned by Oyak Group, Turkey’s armed forces pension fund, is now said by some people involved in the auction to be the leading contender to acquire the UK’s second-largest steel producer.
However, the bidding process remains fluid and several companies are thought to remain involved.
Insiders said that Erdemir was working with investment bankers in London on its offer, despite issuing a statement to the Istanbul stock exchange this month in which it denied having submitted a formal bid.
A deal with Erdemir remains far from guaranteed, and is likely to have been made at least marginally more uncertain by this week’s events in Westminster, which included the replacement of Greg Clark as business secretary.
Mr Clark had spearheaded the government’s efforts to find a saviour for British Steel, holding talks with steel producers in China, Russia and India.
His replacement, Andrea Leadsom, is expected to take a close interest in the auction’s outcome, although her ability to shape a takeover deal is limited by insolvency law.
As a consequence of the uncertainty surrounding its future, EY has drawn up contingency plans for the possible closure of its vast Scunthorpe steelworks, where about 3,000 people work.
The company employs more than 1,000 employees elsewhere, while an estimated 20,000 jobs in its supply chain are dependent upon the company.
Boris Johnson, the new prime minister, suggested during the Conservative Party leadership contest that he would ensure that the government continued to bankroll the company.
It is not clear whether Erdemir would seek a sizeable government dowry in order to take on the site in north Lincolnshire.
EY has told bidders that it would like to conclude a deal by the end of August, following the annual summer shutdown at Scunthorpe.
British Steel is estimated to be losing around £20m every month, making the prospect of a full takeover without some form of guaranteed state funding a remote prospect.
A separate bidding war has broken out for TSP Projects, a transport and infrastructure design specialist which has been close to a sale to Systra, a French engineering company, for more than a fortnight.
Other bidders for parts of British Steel have included Greybull Capital, which was the company’s owner for three years before it collapsed, and Evraz, the Russian steel group.
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