Struggling steel-maker Tata Steel is negotiating with investment firm Greybull Capital over the potential sale of its Long Products business.
The deal, if signed would affect 4,700 employees of Long Products Europe and several UK facilities including its Scunthorpe steelworks, mills in Teesside, an engineering workshop in Workington, a design consultancy in York, and mills in Dalzell and Clydebridge which are currently being mothballed.
The two firms have signed a letter of intent regarding the transaction but have admitted a lot of work remains to be done.
"This is an extremely critical time for the whole industry, and we have been working hard to explore all options that could provide a future for the Long Products Europe business,” said Karl Koehler, chief executive of Tata Steel's European operations.
Unions welcomed the announcement, which comes in the wake of a spate of job losses in the UK steel industry – a result of an ongoing struggle with cheap imports from China.
"Today's announcement is the result of the huge effort put in by employees, trade unions and management to seek a future for the Long Products Europe business by creating a turnaround plan,” said Bimlendra Jha, executive chairman of the Long Products Europe business.
"The development of this plan, in co-operation with customers, suppliers and government, has enabled us to reach this stage, though much work remains to be done to reach a successful outcome."
Tata Steel Europe employs around 30,000 people across Europe, including about 17,000 in the UK.
Greybull said in a brief statement: "Greybull Capital LLP confirms that it has signed a letter of intent with Tata Steel to enter exclusive discussions on the possible acquisition of the Long Products Europe business based in Scunthorpe, North Lincolnshire.
"Whilst this is an important milestone, much work remains to be done to reach a successful outcome."