The majority of collapsed steel group Aartee Bright Bar will be bought by Bradford-based Barrett Steel in a £13mn rescue deal, thwarting previous attempts by Sanjeev Gupta’s Liberty Steel to purchase the business.
Barrett Steel, a steel stockholder, has bought the majority assets of Aartee, Britain’s largest distributor of engineering steel products, the company’s administrators said on Monday.
Under the terms of the deal, Barrett Steel will purchase the distribution business and the property interests of Aartee, saving 173 jobs. The company’s rolling mill in Dudley, however, is not included in the purchase and will be wound up, leading to 45 redundancies.
“This substantial investment from Barrett Steel is a vote of confidence in the business and the wider UK steel industry. The companies’ creditors will now receive a substantial dividend and will have the opportunity to trade with the new business going forward,” said Michael Magnay, managing director at Aartee’s administrator Alvarez & Marsal.
The sale was agreed after a judge on Friday put Aartee’s immediate UK holding company, Aartee Steel Group, into compulsory liquidation. Aartee owes Aartee Steel Group more than £8mn.
The Financial Times on Sunday disclosed that a sale was close and that a deal could be announced this week.
Aartee was put into administration in February at the behest of its main creditor, FGI Worldwide, with Alvarez & Marsal appointed to handle the insolvency.
Liberty Steel, part of Gupta’s GFG Alliance conglomerate, had been trying to acquire the Aartee businesses, which were owned by one of the industrialist’s close associates, Ravi Trehan. Trehan has longstanding ties with Gupta and was previously listed as one of the four members of GFG’s “strategic board”.
GFG purchased Aartee Group Pte, its Singapore-based parent company, on February 17 and tried unsuccessfully to contest the administration of Aartee.
Jeffrey Kabel, chief transformation officer at GFG, said on Monday that the group had “fought hard to rescue Aartee Bright Bar and the 250 steelworkers it employs across the UK after it was unnecessarily plunged into administration several weeks ago”.
He added: “Since that point GFG has provided £650,000 to shield employees from redundancy while a rescue plan could be negotiated.
“Today the administrators have decided against GFG’s business plan, which would have rescued ABB in its entirety, saved all its 250 employees and ensured its continuation as a going concern,” Kabel added.
Alun Davies, national officer at the steelworkers’ union Community, said the union would do everything it could to support its affected members at the Dudley site.
“The steel industry is in this dire situation due to [the] government’s negligence and its failure to act on issues like energy costs and procurement,” he added.
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