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Chinese Owners of British Steel Face Scrutiny Over Dividend Accusations Amidst Financial Support Claims
British Steel’s Chinese parent company, Jingye, is under scrutiny following accusations of indirectly receiving dividends. This is alleged to have occurred through substantial interest charges levied on debt, even as the steelmaker navigates significant financial challenges and job cuts.
Loan Interest Payments Under the Spotlight
Jingye has publicly stated its commitment to British Steel, emphasizing financial support totaling £1.2 billion since acquiring the company in 2020. This backing was intended to aid British Steel, which recently announced the proposed closure of blast furnaces in Scunthorpe, potentially resulting in 2,700 job losses.
However, recently released financial records for 2023 reveal that a significant portion, £735.7 million, of this support was structured as loans from Jingye and affiliated entities.
With British Steel experiencing considerable financial difficulties – evidenced by a pre-tax loss of £231.2 million in 2023 – direct dividend payouts to owners were not feasible.
Despite this, company accounts indicate that interest payments on loans from its parent group and related parties amounted to £76.5 million between 2020 and 2023.
The debt owed to Jingye and associated companies has consistently increased: from £143 million in 2020 to £364 million in 2021, £630.2 million in 2022, and £735.7 million by 2023. The extent of further lending and interest accrued in 2024 and 2025 remains undisclosed.
Facing Financial Pressure: British Steel reported a substantial pre-tax loss of £231.2 million in 2023.
Questions Raised on Financial Representation
When announcing the intended blast furnace shutdowns on March 27th, a British Steel representative stated: “Since 2020, Jingye, the shareholder of British Steel, has invested over £1.2 billion to sustain operations amidst persistent production instability and considerable financial deficits of approximately £700,000 daily.”
However, the manner in which the Chinese firm has characterized its financial contributions to British Steel has drawn considerable criticism.
Clive Betts MP, Labour representative and deputy chairman of the public accounts committee, commented on the situation: “If Jingye has provided funding as loans rather than direct capital注入, they should exercise greater caution in their public statements. It is clearly not a straightforward subsidy if money has been lent and interest is being collected.”
When questioned if the interest could be viewed as an indirect dividend, Mr. Betts responded: “If a return is generated on any investment, it inherently represents a form of dividend.”
He further indicated his intention to raise concerns regarding British Steel’s financial accounts during the upcoming public accounts committee hearing with the permanent secretary of the business department.
Jingye Defends Financial Approach
A Jingye spokesperson offered clarification: “Jingye has invested a total of £1.2 billion into British Steel through a combination of equity and loans with minimal or no interest. These funds have been allocated to strategic capital expenditure, covering trading losses, and supporting the company’s working capital needs.”
The spokesperson added, “The majority of interest accrued on these loans is not yet settled in cash, and in instances where interest-bearing loans have been cash-settled, the interest rates applied are significantly lower than the Bank of England’s base rates and standard commercial lending rates.”