It has been reported (Per Sky News) this morning (21st May 2019) that the UK’s second-biggest steel producer will appoint administrators on Wednesday if it fails to obtain a £30 m government loan.
The result of failing to gain a £30m government loan would mean that over 20,000 jobs would be at risk, however, the ripples felt by a closure would be felt even greater in the local communities.
The first jobs to go would be the 4,000 workers who are based at the Scunthorpe steelworks, followed by major jobs cuts at its additional sites, and as many as 20,000 more jobs in its supply chain also at risk by the British Steel pending insolvency.
The company troubles have been linked to a lack of orders from European customers due to the increasing uncertainty over the UK’s future relationship with the EU.
British Steel has also been struggling with the weakness of Sterling since the 2016 EU referendum and the ongoing China-US trade war.
The company tired to seek emergency financial support from the UK government earlier on, however, the first amount which was put forward, £75m had been reduced to £30m.
Greybull Capital, British Steel’s shareholders and their lenders have agreed to put new money into the struggling company on the condition that the new government load be made on secured terms.
However, talks between the different stakeholder have stalled as a compromise has yet be agreed, making it more likely that the company will be placed into admiration on Wednesday.