Legal threat is bar to agreement on Corus

Jun 12 2009 by Sue Scott, Evening Gazette

THE FOUR international steel buyers who walked out on an agreement with Corus Teesside Cast Products’ (TCP) plant at Redcar, putting more than 2,000 jobs at risk, broke their silence today.

In an exclusive interview with the Gazette, they revealed that the consortium had been locked in a stalemate with London-based steel chiefs since local MP Vera Baird’s intervention in Italy last month succeeded in getting the two sides to talk for the first time since April.

Mrs Baird, who has acted as honest broker in an attempt to bring them back to the table, flew to Mantua carrying with her the signatures of 240 local business leaders calling on Marcegaglia, as head of the consortium, to reopen negotiations.

A bid by Marcegaglia and fellow consortium member Dongkuk to buy the plant now looks increasingly dependent on Corus withdrawing its threat to sue the consortium for tearing up a 10-year offtake agreement that would have guaranteed TCP’s future until at least 2014.

Corus, meanwhile, sees no advantage in dropping its case, although the outcome is far from certain and would take several years to pursue. It points out that TCP has consistently bent to the Consortium’s demands and there was plenty of flexibility within the offtake agreement to reach a compromise until such time as the plant was sold. With both sides refusing to budge, the likelihood of rescuing anything from the deal appears increasingly remote. The Consortium has said it is now within days of leaving the room for good.

A spokesman said: “The consortium’s offer to discuss possible commercial solutions remains open. But the ball is very much in Corus’ court and time is running out.

“It’s three weeks now since the consortium opened the door to talks about commercial solutions at TCP so long as Corus was willing to create the conditions for discussions to take place. Unfortunately, Corus appears not to want to walk through that door.

“The process has stalled because Corus’ leadership insists on sticking to its ‘see you in court’ strategy. The consortium made very clear from the start that it cannot engage under those conditions.

“It seems that Corus prefers to resolve the fate of TCP with its army of lawyers tomorrow rather than around the table today. That’s of no use to the workforce on Teesside.”

The spokesman said the consoritium would co-operate with arbitration procedures over the offtake agreement, “but it’s the host of additional, aggressive legal attacks by Corus against the consortium members that are the barrier to any discussion”.

TCP MD Jon Bolton, whose team has been working around the clock to secure enough orders to keep the plant running until August when the 90-day redundancy consultation ends, said the consortium had “always been able to discuss commercial opportunities with Corus.

“But instead they terminated the agreement without warning when the market turned against them and we lost 80% of our order book overnight.

“What we really need now is a long-term solution for Teesside.

“We have to focus on actions rather than words and the fact is that it’s Corus that has placed orders to get us to the end of July.”