SHEFFIELD Forgemasters has been handed a £30m support package by three key firms in the Trident nuclear submarine programme, it has been reported.
The Ministry of Defence is said to have brokered a deal under which BAE Systems, Babcock International and Rolls-Royce Holdings agreed to underwrite bank loans to the steelmaker, which is a critical supplier to Trident.
Forgemasters last week announced it was cutting up to 100 jobs after posting a £9.4m loss due to a ‘storm’ hitting the sector including a decline in oil and gas exploration, high energy prices, slowing global growth and a collapse in steel prices.
At the time, chief executive Graham Honeyman confirmed the firm had taken out a loan which would fund the business through to the end of March 2017.
Sky News is reporting sources claiming Submarine Enterprise Partners - the organisation delivering the replacement fleet of nuclear submarines and in which BAE, Babcock and Rolls Royce are the corporate stakeholders - has agreed to provide guarantees for just under £30m of loans provided by the US bank Wells Fargo.
The MoD is said to have intervened to negotiate a solution following reports in November that a Chinese state-backed steelmaker wanted to invest in Sheffield Forgemasters - a prospect which caused deep unease in Whitehall. The alleged move underlines the critical nature of the reactor casings made by the company for Britain’s nuclear submarines.
In Sheffield Forgemasters’ latest set of accounts - which were overdue when filed this week at Companies House - its chairman, Tony Pedder, said: “The storm clouds which seem to gather periodically over the steel and steel-related sectors are once again evident.”
The accounts revealed an operating loss of £9.4m for the 18 months to December 2014, although Mr Pedder said Sheffield Forgemasters had “concluded an extension to our financing facility.”
Company executives have signalled that they are open to the idea of attracting additional external investment, although they have insisted that such a move is not essential.
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.
A Unite union spokesman said official notification from the company stated 75 job losses would be needed - and up to 40 people had expressed an interest in leaving voluntarily ahead of a deadline earlier this week.
The jobs are expected to go by the end of February.
A BAE spokeswoman said: “Sheffield Forgemasters International is a supplier to our submarines business. The terms of our contractual relationships with our suppliers are confidential.”
Babcock echoed that statement, while Rolls Royce declined to comment and the MoD could not be reached for comment.