Hundreds of Welsh steel jobs have been safeguarded after the UK’s second-largest producer agreed a multi-billion debt refinancing.
Spanish steel giant Celsa, which employs about 600 workers making steel at its Cardiff base and has a further 1,400 UK staff, has agreed a deal that will almost halve its debt load, easing pressure on the company’s finances.
Celsa has agreed a deal with a consortium of Spanish lenders that will cut its debt pile from €2.67bn (£2.4bn) to €1.43bn over five years.
The remaining €1.24bn will be taken off the company’s balance sheet until it matures in 2023, giving Celsa the breathing space it needs to continue.
There had been speculation this summer that the debt mountain would force Celsa into a painful round of cost cuts, job losses and disposals as lenders piled on the pressure.
Celsa had avoided reductions in staff and the sale or closure of sites that many of Britain’s steel makers were forced into two years ago as the sector was plunged into crisis by a combination of a flood of mainly Chinese imports, rising raw material costs and high energy prices.
The company said the deal would “normalise its financial situation” and it led it to upgrade its forecasts for the year.
Celsa Group now expects turnover of €4.5bn this year and pre-tax earnings of €450m, increases of 30pc and 50pc respectively.
“This agreement gives full support to our strategic plan and allows us to look to the future with guarantees,” the company said in a statement.
Celsa’s UK operations make rebar steel used in construction to reinforce concrete. The company has an annual production capacity of 1.1m tons in Britain, although it is thought to be working at about 70pc of this rate at the moment.
Last year the company won a £100m deal to supply 200,000 tons of steel to help build the massive Hinkley Point nuclear power station. Celsa has also been helped by the rising price of rebar.
According to data from ISSB, rebar produced in Northern Europe has risen in price from about €475 per ton to €555 since the start of the year, while raw material prices have remained flat.
Source from: By
