RPT-UPDATE 2-Britain finds a buyer for one Tata steel plant, saving a third of jobs at risk

* Greybull deal saves more than 4,400 jobs in UK, 400 in
France

* Greybull arranging 400-million-pound package

* Sanjeev Gupta says he has the money to buy rest of Tata UK

* Thousands of jobs on the line as Tata sells up in Britain

* Ahead of EU vote, Cameron under fire over Tata, tax

* Graphic on UK steel crisis: tmsnrt.rs/1Y0kLb4

(Repeats story with link to graphic)

By Guy Faulconbridge and Sarah Young

LONDON, April 11 Tata Steel agreed to
sell one of its main British steelworks to investment firm
Greybull Capital for 1 pound on Monday, saving a third of the
15,000 jobs placed in jeopardy by the Indian conglomerate’s
decision to sell up in Britain.

Prime Minister David Cameron has been under pressure to keep
the plants open to save jobs after Tata, one of the world’s
biggest steelmakers, said on March 30 it would sell its
loss-making British business.

As Tata formally announced the sale of its steel assets in
Britain, turnaround specialist Greybull Capital LLP said it
would buy the Indian company’s Long Products Europe division in
Scunthorpe, northern England, which employs 4,400. It declined
to rule out further purchases of Tata’s British steel assets,
including its plant at Port Talbot in Wales.

The sale to Greybull – for a nominal pound or 1 euro –
includes a 400 million pound ($570 mln) investment and financing
package for the Scunthorpe business, as well as agreements with
suppliers and unions on cutting costs.

“We’re expecting no redundancies going forward, the business
plan calls for no redundancies,” Greybull co-founder Marc
Meyohas told reporters on a conference call.

The Greybull deal, which is subject to a ballot by union
members, includes two additional mills, an engineering workshop
and a design consultancy in Britain, plus a mill in Hayange, in
northeast France.

The purchase will see the business renamed ‘British Steel’,
in a revival of a historic name last used almost two decades
ago.

Cameron, already grappling with a divided ruling party ahead
of a June 23 referendum on membership of the European Union, has
been scrambling to try to find buyers for Tata’s Scunthorpe
plant and its other main plant at Port Talbot, to save jobs.

Britain’s eurosceptic media has blamed Brussels for
preventing London from taking greater steps to protect the steel
industry while the opposition Labour Party has called on Cameron
to do more to save the plants.

Tata, which owns iconic brands such as Jaguar Land Rover and
Tetley Tea, is offloading its British steel operations, citing a
global oversupply of steel and cheap imports from China, high
costs and weak domestic demand.

BRITISH STEEL?

The deal for the Scunthorpe plant, which Tata had been
trying to sell since 2014 before revealing talks with Greybull
were underway in December, is expected to complete in eight
weeks subject to certain conditions being met.

Greybull, which is not taking on pension liabilities, said
about half of the 400 million pound package would come from
shareholders of Greybull and half from banks and government
loans.

“We’re expecting the company to be profitable in year one
and that’s very much the management plan,” said Meyohas, who
co-founded Greybull in 2008 after 12 years as CEO of technology
services company Cityspace.

Though the deal is positive for the Scunthorpe workers,
there is deep unease in Port Talbot, Britain’s biggest steel
plant, where 4,000 people could be out of a job if Tata fails to
find a buyer.

“While very welcome it does not mean that we are out of the
woods yet,” said Gareth Stace, director of trade association UK
Steel.

“A long-term investor is needed, in the very short term, for
the remainder of the whole of the Tata Steel UK business,
including Port Talbot,” said Stace.

Scunthorpe produces steel mainly used in construction and
infrastructure projects, whereas Port Talbot produces slab, hot
rolled, cold rolled and galvanised coil which is used in
products from cars to washing machines to food cans.

Finding buyers for Port Talbot and Tata’s other assets,
could take some time given the complexity of any deal, including
negotiations over everything from pensions liabilities to energy
subsidies.

Greybull said to date it had been wholly focused on the
Scunthorpe deal, but declined to rule out future interest in the
Port Talbot plant.

“Whether it’s Tata or any other assets, we’ll review it as
and when is appropriate,” Meyohas said.

Another potential bidder for the Port Talbot plant is
Sanjeev Gupta, the boss of metals trader Liberty House Group.

“LOSS-MAKING”

Gupta told Reuters on Friday that he was serious about
making an offer and had the backing of a group with $7 billion
of revenues, hitting back at critics who have questioned his
capacity to take on a business dragged down by heavy debt and
weak sales.

However, much will depend on how much any potential investor
is willing to pay to even hope of turning around the business.

“It’s a loss-making business and a loss-making business is
not worth a lot in itself to buy,” Gupta said. “It’s more of a
question of what are the resources required in turning it
around.”

Tata, under former Chairman Ratan Tata, bought its UK steel
operations in 2007 after outbidding Brazil’s CSN to buy
Anglo-Dutch steelmaker Corus for $12 billion as a way to access
the European market.

But the Indian conglomerate, controlled by philanthropic
trusts endowed by the Tata family, struggled to turn the
steelmaker around.

Like competitors such as ArcelorMittal, the world’s top
steel producer, Tata has been hit by plunging prices due to
overcapacity in China, the world’s biggest market for the alloy.

China said on Monday it wants to work with the rest of the
world to find an appropriate resolution to overcapacity in the
steel sector, after Britain asked Beijing to hurry up and tackle
the problem.

Tata Steel is the second-largest steel producer in Europe
with a diversified presence across the continent. It has a crude
steel production capacity of over 18 million tonnes per annum in
Europe, but only 14 mtpa is operational.
($1 = 0.7026 pounds)

(Additional reporting by Freya Berry and David Milliken.;
Editing by Susan Fenton)

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