British Steel’s Chinese owners were accused of taking dividends ‘by the back door’ after charging the company tens of millions of pounds in interest payments on debt.
Jingye has emphasised how it supported British Steel – which has announced plans to close Britain’s last two blast furnaces at Scunthorpe with the loss of 2,700 jobs – to the tune of £1.2bn since taking ownership in 2020.
However, most recently available accounts – for 2023 but only published days ago – show £735.7m was in the form of loans from the parent group ‘and related companies’.
British Steel has been heavily in the red, recording a pre-tax loss of £231.2m during 2023, so its owners could not pay themselves dividends.
However, its accounts showed interest payments on loans to its parent ‘group and related parties’ totalling £76.5m were paid between 2020 and 2023.
Debt owed to Jingye and linked companies rose steadily, from £143m in 2020 to £364m in 2021, £630.2m in 2022 and £735.7m in 2023. It is not known how much more was lent and what interest was taken in 2024 and so far in 2025.
Feeling the heat: British Steel has been heavily in the red, recording a pre-tax loss of £231.2m during 2023
Announcing the proposed blast furnace closures on March 27, a British Steel spokesman said: ‘Since 2020 the shareholder of British Steel, Jingye, has invested more than £1.2bn to maintain operations amid ongoing production instability and significant financial losses of around £700,000 a day.’
But the Chinese company faced heavy criticism of how it has represented the financial support given to British Steel.
Labour MP Clive Betts, deputy chairman of the public accounts committee, said: ‘If Jingye has loaned money rather than actually put money in, they ought to be much more careful about the descriptions they’ve used. Clearly it’s not simply a subsidy if you have lent money and taken interest on it.’ Asked if the interest was effectively ‘a dividend by the back door’, he said: ‘If you get a return for whatever investment you put in, of course it is.’
He said he would raise British Steel’s accounts when the permanent secretary of the business department appears before the public accounts committee this week.
A Jingye spokesman said: ‘Jingye has invested a total of £1.2billion into British Steel through a combination of equity and low or zero interest loans. These funds have been used for a combination of strategic capital investment, funding trading losses and supporting the working capital requirements of the business.
‘The majority of interest payments on these loans are accrued and not cash-settled, but where interest-bearing loans have been cash-settled, the interest rates are significantly below Bank of England base rates and any commercial lending facilities.’
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This article was originally published by a www.dailymail.co.uk . Read the Original article here. .