Thursday, December 24, 1998 Published at 11:16 GMT
Business: The Company File
Steel jobs on the line
ASW says staff will be told about job cuts first
Further job losses in Britain's steel industry look inevitable after steelmaker ASW announced it was taking over a rival manufacturer.
Cardiff-based ASW said there would be job cuts from the £40m deal for Kent-based Co-Steel Sheerness but declined to give further details.
ASW employs 2,800 staff at its three Cardiff mills while the Sheerness plant, based on the Isle of Sheppey in Kent, has 580 workers.
A spokeswoman for loss-making ASW said: "There will be job losses eventually but the company will tell staff first. There is no confirmation of figures yet."
ASW is smaller than Sheerness and the move is classed as a reverse takeover under Stock Exchange rules.
George Duncan, chairman of ASW, said: "The acquisition of Co-Steel Sheerness presents a unique opportunity to create a position of product market leadership in the UK.
"This transaction also provides the opportunity for rationalisation which will transform the cost structure of the enlarged group, which is already one of the most competitive steel producers in Europe."
The deal is backed by complex financing from venture capital company Candover Partners.
There will be a share offer to raise £17m while Candover will provide a £29m loan which is convertible into shares.
This could leave Candover holding up to 54% of the enlarged company.
The group will use some of the money raised to pump £14.5m into its ailing French subsidiary SAM.
ASW shares were suspended on the stock market earlier this week when it announced a reverse takeover could take place.
Stocks will be relisted once its proposals have been approved and the takeover completed.
Stockbroker Albert E Sharpe will underwrite part of the share offer.
The integration of the two businesses will be led by Graham Mackenzie, former chief executive of United Engineering Steels. He will join the enlarged group as chief executive.
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