July 1, 2019

Network Rail eyes British Steel stake

Network Rail, an agency of the UK’s Department for Transport (DfT) that is owner and infrastructure manager of most of the country’s railway network, has made a bid for parts of British Steel ahead of an initial deadline for offers for the company, which collapsed into liquidation in May.

Network Rail is understood to have prepared a bid for Scunthorpe-based British Steel’s rail service centre business, responsible for the welding, finishing and storing of rails for the UK’s train network.

Network Rail, manager of the UK’s 20,000 miles of rail tracks, bid to avoid the possibility of losing an important supplier.

The British railway system is heavily dependent on British Steel, which accounts for 97% of the steel used in railway tracks.

A bid by Network Rail could be seen as an attempt to nationalise part of British Steel.

Greybull Capital, the private equity investor under which British Steel collapsed, also has confirmed interest in a bid for parts of the company if a buyer for the entire operation could not be found.

A bid by Greybull for parts of the business, which could include British Steel’s Dutch or French operations, also would be highly controversial.

Potential bidders had until 1 July to make offers, although bids received after that date are likely to be considered.

About a dozen companies were thought to have expressed interest in buying all or parts of the business, after 80 parties made preliminary enquiries.

Potential buyers reportedly include India’s JSW and Evraz, a Russian steel and metals conglomerate part-owned by Roman Abramovich.

British Steel, bought by Greybull in 2016 for £1, was lent £120 million in April by the UK government to pay a carbon emissions bill, had asked for an additional £75 million that was later reduced to £30 million.

The government declined to bail out the company, opting instead to look for a new owner.

In 2017, Monarch Airlines went bust while under Greybull’s ownership.