Celsa UK Holdings, will receive a £30mn ($37mn) loan from the UK government under the Project Birch initiative.
The loan will involve the state taking over the assets previously secured for commercial lenders. The UK Treasury has expressed willingness to take direct shareholding status in companies strategically important within its borders and the loan to Celsa is being viewed as part of this initiative.
The deal includes a £30mn government loan supplemented by a £50mn loan from existing lenders for the British arm of the Spain-based company. The government’s loan will be repayable over a three-year period, at approximately 10pc return, and will allow up to a 20pc equity option in Celsa UK to be exercised by the Treasury for a modest payment.
Celsa is making commitments on executive pay decreases, dividend restrictions, employment guarantees to line workers, taxes, and environmental improvements. The government is likely to appoint a board observer to oversee execution towards business plan and reporting obligations.
Celsa employs approximately 1,600 in the UK and produces 1.2mn mt of steel annually at its Cardiff facilities.
Project Birch was established by the UK Treasury to provide financial support to companies outside the COVID-19 direct stimulus. The UK provides loans of up to £250mn to entities under its Coronavirus Large Business Interruption program.