Forum Topic

Disastrous news for Scunthorpe

British Steel going into administration.  Some of the misspent Government money could have saved these jobs.  What else is there for Scunthorpe?

Philippa Bond ● 2730d6 Comments

Indeed Philippa, and one should look carefully at Greybull Capital, run by two French brothers and a Swede, all millionaires and UK residents.  Based in Knightsbridge, with a somewhat anonymous website, they previously backed the buyouts of Monarch Airlines, Comet Group, Game Group, and Rileys, all of which have since collapsed.Cheap steel from China is not the only reason for the collapse, as UK produced steel is of much higher quality, and another Tata deal in Wales scuppered by the European Commission.Scunthorpe has nothing else, and these devastated souls cannot even rely on state help, due to European Commission rules preventing "State Aid".  Heart-breaking.

Chantal Blake-Milton ● 2729d

Just to clarify EU and State Aidhttp://ec.europa.eu/competition/state_aid/overview/index_en.html'A company which receives government support gains an advantage over its competitors. Therefore, the Treaty generally prohibits State aid unless it is justified by reasons of general economic development. To ensure that this prohibition is respected and exemptions are applied equally across the European Union, the European Commission is in charge of ensuring that State aid complies with EU rules.'As I read it if the British Government wished due to 'reasons of economic development' to bail out British Steel it could. It's plain here that the EU would not overrule it under these circumstance,  especially since BS put some of the blame on Brexit!OTOH any such support should not open the door to the taxpayer funding other private companies which have been seriously mismanaged.

Lucille Grant ● 2729d

This takeover by the hedge fund bandits was a disaster: as in so many takeovers (think of Manchester United, for example) the deal is done by loading the utility/company/club with huge debts to pay for the takeover, often loaned by the hedge funds themselves at extortionate rates of interest, and then charging huge sums in "management fees" and other scams as Greybull have done in the case of Scunthorpe. And what's left is asset-stripped with the valuable bits sold off and, as with that slimy toad Green of Arcadia, the retirement funds are underpaid or payment holidays are announced.It's all an exercise in extracting as much money as possible and then abandoning what's left for the government to pick up, as Greybull have done in other takeovers, as someone else here pointed out.. Disgusting, outrageous - and entirely legal, as our hopeless government conveniently looks the other way.

Richard Carter ● 2728d

Hedge funds and their managers have  a lot to answer for. Many businesses besides British Steel expanded due to the 'easy' money they made available and are now regretting it. Meanwhile the hedge fund managers made their fortunes.  Suspect quite a few live in Putney!

Lucille Grant ● 2728d

Indeed! You probably remember Slater Walker, the company led by Jim Slater that made a lot of money by asset-stripping in the 1970s: https://www.bbc.co.uk/news/business-34878706. It later went bust owing huge debts and had to be bailed out, an example of karma if ever I saw one. But they look like rank amateurs compared with today's vulture funds, who have developed many more, and more sophisticated ways of screwing the businesses they take over.

Richard Carter ● 2728d

Yes, I remember that well.

Lucille Grant ● 2728d