THE British arm of the Thai group that bought the Redcar steel plant on Teesside last year has breached loan agreements with its banks twice since December and anticipates a further breach this year.
Sahaviriya Steel Industries (SSI) relit the plant’s blast furnace in April, more than two years after former-owner Tata mothballed it.
Many of the 1,600 workers who lost their jobs when Tata decided to shut the 160-year- old plant in 2010 have been re-employed by SSI, which rescued it in a £290m deal.
SSI’s latest accounts, filed at Companies House, said restarting a blast furnace requires “significant capital investment”.
Financing the operation has been further complicated by strike action, unforeseen repair work and bad weather delaying the restart programme. These delays meant that costs ballooned, while also pushing back the plant’s break-even date. It is now scheduled to begin trading profitably in the first quarter of 2013.
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SSI said: “As a result of the delay in restarting production, the company breached one of its covenants in December . . . Further breaches of covenants at 31 March, 2012, were also waived.” It expects another breach of its banking agreements in the coming year, but was confident of retaining its bank’s support.
SSI has secured fresh funds since January. The company’s accounts show it has sourced $190m (£124m) from two commercial banks in Thailand, plus $30m from its parent group.
The funding was dependent on the site producing its first slab of commercially viable steel, which it achieved in April — a 24 tonne steel block, dedicated to the memory of union boss Geoff Waterfield, who had battled to save the plant before he died last August.
At full capacity the plant will produce up to 400 slabs of steel a day, each weighing up to 33 tonnes. The company expects to export the majority of this to Thailand.