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British Steel eases workers' pay fears while search for 'credible' buyer continues

British Steel sign 

Bosses at embattled British Steel have attempted to ease workers' fears that their pay is at risk while a “credible buyer” is sought.

Rumours have circulated among the company’s 5,000 staff that there could be an issue with their July salaries, due to be paid on the 25th.

However, The Telegraph has seen an internal memo signed by chief executive Gerald Reichmann that states staff will be paid as normal.

“We are still operating in a ‘business as usual’ capacity and will continue to do so while we seek a solution,” he said.

The company - which was taken over by the Official Receiver in May - was still placing orders for raw materials and services as it continues to function while buyers are sought, Mr Reichmann added. 

British Steel collapsed when owner Greybull failed to secure a £30m state bailout, throwing into jeopardy the jobs of its direct employees and another 20,000 positions in its supply chain.

It was taken over by the Receiver – a court-appointed body – which is tasked with securing the best return for creditors, usually through a fire sale of failed companies' assets.

However, British Steel is being kept running with the support of a taxpayer-backed indemnity that the Government aims to recover from a new owner.

Mr Reichmann called the situation “unsettling” for staff, but said “any potential sale will take time to deliver”.

He added: “The Official Receiver and Government are still in detailed discussions with a series of credible buyers and our focus remains on selling the business as a whole.”

It is understood that 10 bids have been received for the business, about half of them proposals to buy British Steel in its entirety, while others seek to pick off chunks of the company.

Names in the frame are thought to include China’s Hesteel and Hebei, India’s JSW and Turkish steel business Erdemir. UK-based Liberty Industrials has also been linked to an approach.

Alasdair McDiarmid, operations director at the steelworkers' union Community, said: “We understand that the uncertainty through the sales process can be difficult for steelworkers. However, it is important that the appropriate time is taken to ensure that proper due diligence is carried out.

"A rushed sale would not necessarily lead to a sustainable future. We welcome the fact that there is cross-party support for selling the whole business and that the political will remains to achieve a successful outcome.”