British Steel, the country's second largest steel producer, is on the brink of collapse unless the government agrees to provide an emergency 30 million pound ($38 million) loan by later on Tuesday, a source close to the situation said, reports Reuters.
The steelmaker, owned by investment firm Greybull Capital, employs around 5,000 people, mostly in Scunthorpe, in the north of England, while 20,000 more depend on in its supply chain.
Greybull, which specializes in turning around distressed businesses, paid former owners Tata Steel a nominal one pound in 2016 for the loss-making company which they renamed British Steel.
British Steel had asked the British government for a 75 million pound loan but has since reduced its demand to 30 million pounds after Greybull agreed to put up more money, according to the source close to the negotiations.
If the loan is not approved by Tuesday afternoon, administrators EY could be appointed for British Steel as early as Wednesday, the source said.
"The UK steel industry is critical to our manufacturing base and is strategically important to UK industry. The government must intervene," said Gill Furniss, Labour's spokeswoman for steel.
"Administration would be devastating for the thousands of workers and their families who rely on this key industry in a part of the country which has not had enough support and investment from government over decades," Labour said.
If British Steel goes under it would mark the demise of one of the key parts of what was once a national champion of the British economy.
Unions demanded the government give the loan.
"They must now put their money where their mouth is," said Ross Murdoch, national officer for the GMB union for steelworkers.
"GMB calls on the Government and Greybull to redouble efforts to save this proud steelworks and the highly skilled jobs," Murdoch said.
A spokeswoman for Britain's business ministry declined to comment on the details of British Steel but said: "We are in regular conversation with a wide range of companies."
British Steel secured a government loan of around 120 million pounds ($154 million) in May to enable it to comply with the European Union's Emissions Trading System (ETS) rules.
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