A French engineering giant has joined the battle for control of the UK’s second-biggest steel producer with an approach to buy part of the ailing company that is attracting scrutiny from pensions watchdogs.
Sky News has learnt that Systra, a major international player in transport infrastructure, is trying to prise TSP Projects, a wholly owned subsidiary of British Steel, out of the stricken group.
British Steel, which collapsed into insolvency last month and whose survival is ultimately responsible for about 25,000 jobs, is now under the control of the Official Receiver.
EY, which is overseeing efforts to sell the Scunthorpe-based company as an adviser to the government, has asked potential bidders to table offers by the end of the month.
While ministers boasted that scores of companies had signed non-disclosure agreements as part of the sale process, few bids for the whole of British Steel are anticipated.
Whitehall sources said this weekend that EY was resisting efforts to carve individual units out of British Steel for fear of undermining the wider objective of salvaging a future for the Scunthorpe plant.
A decision to sell TSP Projects to Systra would pave the way for a full break-up of the business, they added.
On Saturday, the Financial Times reported that Evraz, a Russian metals and mining group whose biggest shareholder is Roman Abramovich, the billionaire owner of Chelsea Football Club, was interested in British Steel’s operations in France.
Greybull Capital, which bought British Steel for £1 three years ago, is also interested in acquiring parts of the company in the UK and elsewhere out of the insolvency process.
Systra’s interest in acquiring TSP Projects, which has contracts to work on railway systems at Gatwick Airport and broader infrastructure design in aviation, construction, energy and security.
A source said this weekend that TSP Projects was widely respected for its expertise across the engineering sector and that it was “no surprise” that it was being circled by suitors.
York-based TSP Projects employs about 400 people and made a profit of about £1.9m last year.
Its biggest clients include Network Rail, Siemens and Costain.
TSP Projects is said by people close to the insolvency process to be pushing for a sale to Systra or another party in order to remove the uncertainty over its future.
Systra’s interest in an offer for the British Steel unit underlines the international nature of the contest to buy parts of the company.
It is owned by the French state railway SNCF, RATP and a consortium of French banks.
Systra counts Andrew McNaughton, the former chief executive of Balfour Beatty, among its top management.
However, its attempt to buy TSP Projects is understood to have also drawn the attention of the UK’s Pensions Regulator because of the estimated £70m deficit in its retirement scheme.
The watchdog is said to be insisting that the responsibility for closing the deficit would be taken on in full by any prospective acquirer.
TSP Projects’ pension scheme has only 14 active members, about 400 deferred members and 133 members who are receiving pensions from the company, according to information circulated to potential bidders.
The future of British Steel remains a deeply sensitive issue for the government, with the Official Receiver yet to set a formal date for the point at which it will cease to fund the company’s British operations.
British Steel’s collapse into insolvency came just weeks after Greg Clark, the business secretary, handed a £120m government loan to the company to help it meet its obligations under an EU scheme for industrial polluters.
A further support package was due to be given to British Steel but was withdrawn at the eleventh hour amid concerns that it would breach state aid rules.
The company’s insolvency prompted MPs on the business select committee to launch an inquiry into the future of the UK’s steel industry.
Systra and TPR declined to comment this weekend.
A spokesman for the Official Receiver said that British Steel’s “sales process is ongoing and the Official Receiver continues to speak to interested parties”.