Tata Steel Pension Liabilities Scare Investors

Britain’s steel industry is suffering from a huge wrongdoing.

Tata Steel’s pension liabilities, where part would be shouldered by the government, has found an obstacle in the form of scared investors.

To bolster the selling of Tata Steel, the government is offering hundreds of millions of pounds in support for potential buyers. The government will also support the quick transition of the investor to receive a 25 per cent stake while the steel company’s IPO will remain public.

According to UK Business Secretary Sajid Javid, if the plant is not sold to a buyer as soon as possible, it could mean losing 10,000 jobs.

“A number of the potential buyers have said that we won’t have much interest if we have to take over the current pension plan as it is,” Javid told the committee of lawmakers.

“If this pension fund liability is not taken care of, there is no buyer sitting out there to buy this business,” Chief Executive for Tata Steel UK Bimlendra Jha said. “If we don’t solve that problem we are staring at some very, very bad consequences for the taxpayers of the UK.”

Bimlendra had talked to the House of Commons Business Select Committee that the company cannot continue to bleed.

“We have seen over a period of time that manufacturing in Britain has been on a decline. If we were at the same electricity costs as Germany, then (Tata Steel UK) would be 40 million pounds better off – we would not be having negative numbers. We would not be selling the business if we were not losing money,” he added.