BAE Systems, Babcock International and Rolls-Royce Holdings have extended a multimillion pound support package for Sheffield Forgemasters, Britain’s oldest steel-maker. Sky News has learnt that the trio of UK industrial giants agreed in recent weeks to continue to underwrite bank loans to the company for at least another 12 months. The commitment comes a year after the guarantee was put in place amid concerns about the financial health of Sheffield Forgemasters, which has a vital role in the supply chain for the Trident nuclear submarine programme. A source close to one of the FTSE 100 companies said the Ministry of Defence had requested the extension to the financing guarantees as Sheffield Forgemasters recovers after a torrid period for the steel industry. It follows a deal in January last year under which Submarine Enterprise Partners – the entity responsible for delivering the replacement fleet of nuclear submarines and in which BAE, Babcock and Rolls Royce are the corporate stakeholders – provided guarantees for around £30m of loans provided by the US bank Wells Fargo to Sheffield Forgemasters.
That move underlined the critical nature of the reactor casings made by the Yorkshire-based company for Britain’s nuclear submarines.
The MoD is said to have intervened to negotiate a solution following an approach from a Chinese state-backed steelmaker, which wanted to invest in Sheffield Forgemasters – a prospect which caused deep unease in Whitehall.
Sheffield Forgemasters traces its roots back to 1805, making it one of Britain’s oldest surviving industrial groups, and it continues to employ roughly 700 people.
Last month, it was reported to have been heading towards break-even in its most recent financial year.
The company has had occasional brushes with political controversy, after Nick Clegg and David Cameron – the former deputy prime minister and ex-prime minister respectively – were linked to decisions about Government grants and loans to it.
A BAE spokeswoman said on Wednesday: “We work closely with more than 7,000 companies in our UK supply chain, including Sheffield Forgemasters, to develop and manufacture advanced defence and security products for our customers.
“The details of our arrangements with suppliers are confidential.”
Rolls Royce declined to comment, while Sheffield Forgemasters could not be reached.
Credit Photo @ Sunday Times