It is feared thousands of jobs could be lose at its plant in Scunthorpe should the contingency plans, reported by Sky News, be put into place. The company is currently in the midst of a funding crisis and is seeking a further loan of £75million from the Government. Should the British steel giant fail to raise the funds needed to keep the group going, sources claim part of the company could fall into administration as soon as Wednesday. British Steel has been contacted for comment by Express.co.uk.
The company is understood to have secured a financial support loan on commercial terms with Whitehall as part of a broader package announced earlier this month.
However, the second part of the deal was supposed to have been finalised by the end of last week.
The reports of looming administration come after British Steel was granted a £120million funding package from Business secretary Greg Clark.
The taxpayer handout was made to help British Steel pay a carbon emissions bill from Brussels.
KPMG, the big four accountancy firm, is understood to have advising the Government on British Steel.
British Steel has around 4,500 people working directly for the company with as many as 20,000 more in its supply chain.
There are more than 4,000 workers at the Scunthorpe site alone.
British Steel has been squeezed in recent months by ongoing Brexit uncertainty weighing on the pound and repercussions of the US-China trade war.
Around 10 percent of its 5,000-strong workforce were sacked last autumn in an attempt to “streamline” its operations.
It is still possible the funds to save British Steel will still be raised, sources have claimed.
The company is owned by private investment firm Greybull Capital after being purchased from the Indian giant Tata Steel in 2016.
Britain’s manufacturing sector took another tumble this week after Honda announced its Swindon factory will close in 2021 with the loss of approximately 3,500 jobs.
A British Steel spokesperson said: “As we have previously commented, the uncertainties around Brexit are posing challenges for all businesses including British Steel, and we are holding constructive discussions with our stakeholders on how to navigate them.
“Last month the Company agreed a short term bridge facility with Government to help it meet its EU emissions obligations.
“Discussions are continuing about a package of additional support to assist the company address broader Brexit-related issues, whilst continuing with its investment plans.”