Tuesday, July 13, 2010

Corus' plan to sell TCP suffers setback

S Kalyana Ramanthan / London July 14, 2010

Tata Steel’s plans to sell Corus’ Teesside Cast Products plant in the northeast of England suffered a setback today. The consortium they were in talks with pulled out of the deal, saying “Corus has appeared unwilling to engage on a constructive basis”.

The consortium comprising private equity firms Rutland Partners, Hatch Corporate Finance and local developer Chris Musgrave said they had written to Corus to terminate discussions in relation to TCP. “The group had put together a business plan and secured investment and customer support to enable the acquisition of TCP and a return to quality steelmaking on Teesside,” the group said in a media statement.

It refused to elaborate on the reasons behind the failed talks and the turnaround plans if it had successfully concluded a deal with Corus.

A company spokesperson said: “Corus is continuing to make every effort to find a long-term solution for TCP. We remain open to any offers from third parties interested in providing such a solution. To date, Corus has followed up every single enquiry and engaged constructively with any bidder that presented an offer and provided a viable future for TCP.”

The statement by the group of interested buyers said it is willing to re-engage if the new management — the recent change of management in Corus’ European business — demonstrates its willingness to provide the required information and access in a timely and professional manner, allowing the group to progress on its due diligence.

Sources said the reason behind the failed talks was because the buyers’ group refused to sign a confidentiality agreement with Corus. The claims could not be confirmed with either Corus or the buyers’ group.

Corus is also in talks with a Thai steel maker, Sahaviriya Steel Industries (SSI). Tata Steel’s vice chairman B Muthuraman had earlier this month said talks with SSI were on and Corus was awaiting a response from the Bangkok-based company.

Corus’ TCP has been in trouble for a year-and-a-half, since a multi-national group of steel buyers had pulled out of a 10-year purchase contract midway, forcing the management to mothball the plant in February. This has also put nearly 1,700 jobs at TCP at risk.

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