China's Jingye comes to the rescue of British Steel

LONDON (AP) — Chinese conglomerate Jingye has agreed to buy British Steel, in a rescue deal that potentially protects some 4,000 jobs and safeguards a strategic asset as Britain prepares to leave the European Union.

Exact financial terms were not immediately disclosed Monday, and it was not clear what incentives might have been offered by the British government to secure the solvency of the firm, which accounts for about a third of the country's steel production. British Steel Ltd had been ordered into liquidation in May as it struggled with industry-wide troubles and chronic uncertainty around Brexit. The BBC reported earlier that an agreement in principle had been made for the 70 million-pound ($90 million) purchase.

"Completion of the contract is conditional on a number of matters, including gaining the necessary regulatory approvals," Britain's Insolvency Service said in a statement announcing the deal. "The parties are working together to conclude a sale as soon as reasonably practicable."

The acquisition includes the steelworks at Scunthorpe, U.K. mills and shares of FN Steel BV, British Steel France Rail SAS and TSP Engineering. The sale also includes British Steel's Redcar Bulk Terminal Limited.

"As a young company with large ambitions we have long admired British Steel and appreciate its illustrious heritage," Li Ganpo, the group's chairman, said. "We share with the thousands of British Steel workers a passion for this industry and we are determined that together we can transform this business."

The steel crisis underscores the anxieties of British manufacturers, who have been demanding clarity around Brexit. Longstanding issues such as uncompetitive electricity prices also continue to deter investment in U.K. manufacturing.

"While there remains much work still to be done, today's announcement is a huge hurdle overcome on the way to delivering a sustainable future for this cornerstone of British industry," said Gareth Stace, director-general of U.K. Steel, the trade association for the industry.

"A commitment to long-term investment and production in the U.K. is absolutely essential and naturally must sit at the heart of any purchase that now goes ahead. Government support will be critical in helping to deliver this and its efforts and interventions already provided to date are to be much welcomed."

Earlier this year, the government said it had done all it could for the company, including providing a 120 million-pound ($152 million) bridging facility to help meet emission trading compliance costs. Going further was considered potentially unlawful as it could be considered illegal state aid.

Union leaders had called for the government to nationalize the business but seemed pleased with the announcement.

"We welcome this positive step towards securing British Steel under new ownership," said the steelworkers' trade union, Community. "Jingye's interest rightly demonstrates that they believe that British Steel can have a sustainable future."

But Paul McBean, Community's lead representative at British Steel in Scunthorpe, noted that detailed discussions are still needed to make certain that this was "the kind of announcement we've been waiting for."