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Auctioning assets is usually the last resort - Mr Neeraj Singal of BSL

Economic Times reported that Mr Neeraj Singal, vice chairman of the debt-ridden Bhushan Steel Limited told ET in an interview that maker auctioning assets is usually the last resort and it does not capture the best value for the business. Mr Singal also said that banks should have given him a chance to restructure the company as it has not undergone any restructuring in the last 30 years.

Edited excerpts:

Q- There are many suitors for your company. How do you view this?

A - Bidders seem to be interested in only two companies—Essar Steel and Bhushan Steel. However, there are thousands of others NPAs across small and medium-sized firms which face uncertain future. There are likely to be severe job losses across the sector.

Q - Did you have the resources to bid and win back the company if the rules had not been changed?

A - We would have definitely tried some way to get resources and claw back into the company.

Q - The government has clarified if promoters clear the dues they can bid. Does this satisfy you?

A - I think we should have been given a chance at restructuring. We have not undergone any restructuring in the last 30 years of operation. A number of companies including Tata Steel, JSW Steel and SAIL have also faced problems. In my view, the RBI-led process of deep restructuring under Sustainable Structuring of Stressed Assets (S4A) should be brought under NCLT. If it fails to come up with a solution, only then the auction process should be initiated. Elsewhere in the world, in the UK and the US, restructuring with existing promoters is the first option that is tried out. Auctioning off is usually the last resort and it does not capture the best value for the business. A promoter puts his sweat equity into building the asset and is considered to be the best bidder. That aspect of the law has been cast aside. Companies are being sold off at liquidation value, which is giving low value. Banks will not get maximum value in the process. Instead, they should be sold at business value and replacement cost.

Q - Are you planning a legal challenge?

A - That could have been one of the options but we are not considering such an option. It is an emergency like situation. We do not have the time for that.

Q - Wilful defaulters and persons who have diverted funds have been barred. What are your views?

A - I am fully with this decision. I think wilful defaulters should be barred. It is very important to make a distinction between a defaulter and a wilful defaulter. The whole issue hinges on this aspect. The reasons for the default need to be understood. While steel is a cyclical business, de-allocation of our coal block led to disastrous consequences. We have to buy coal at INR 4,000 per tonne instead of getting it at INR 800 from captive sources. We could have set up the plant at Maharashtra or on the coast in Gujarat. We do not sell much in Odisha but went there only because we were assured of the raw material. We bought land in 2006 and started constructing the plant, one year after getting coal and iron ore linkages. We also spent INR 800 crore on developing the Parbatpur coal block, which got de-allocated and remains closed. Along with other steel making players, we also faced huge competition from cheap steel imports for nearly two years before the government decided to take protective steps like MIP, anti-dumping duty and safeguard the steel sector.

Q - How is the company faring now?

A - It is operating but not performing to the extent it should have been. It is doing about 0.8 to 0.9 million tonnes per quarter. This translates to around 3.5 million tonnes per annum. The plant's capacity utilization is around 70%. Ideally, it should have been at 80-85%. The main problem is that the 1.8 million tonnes of coal-based DRI capacity is lying idle. Current EBITDA is INR 600-700 crore per quarter.

Q - Have PE firms and other steel firms reached out to you to make a bid?

A - A number of potential investors had approached us and we have been trying to talk to them. But after this Ordinance, we are not in a position to continue those talks. Investors need clarity and confidence to decide their moves. We do not have access to the board, so who do they talk to?

Q - If you can't bid, what next?

A - I don't know. Our lives have been built around the business and this company. In this situation, it will be very difficult to approach creditors and start anew.

Source : Economic Times
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New Paul Wurth BF of Bhushan Power & Steel delivers hot metal

No 2 blast furnace of Bhushan Power & Steel Ltd (BPSL) at Rengali, Odisha, has commenced operations on the 7th of November, 2017. Design and engineering for this completely new ironmaking unit have been executed by Paul Wurth.

Source : Strategic Research Institute
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US DOC issues affirmative preliminary circumvention rulings on CR & coated steel from Vietnam

The US Department of Commerce announced preliminary affirmative rulings that corrosion-resistant steel (CORE) and certain cold-rolled steel flat products (cold-rolled steel) imported from the Socialist Republic of Vietnam (Vietnam) produced from substrate originating in the People’s Republic of China (China) are circumventing existing antidumping and countervailing duty (AD/CVD) orders on CORE and cold-rolled steel imported from China.

Source : Strategic Research Institute
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Bhushan Power and Steel Insolvency process set to enter second leg

Financial Express reported that the insolvency resolution process for Bhushan Power and Steel is set to enter its second leg, with the committee of creditors about to circulate bid documents among at least eight companies and financial institutions which have evinced interests in acquiring the steel firm. A source said that “Bid document is under finalisation and will be circulated within the next two-three days.”

In September, insolvency resolution professional Mr Mahender Khandelwal had called for qualification documents from interested parties on or before October 6. Apart from the promoters, Tata Steel, Arcelor Mittal, JSW Steel, Vedanta Ltd, Mesco and AION Capital are among companies that evince interest in the firm, which owes lenders close to INR 47,000 crore.

With the recent amendments to the Insolvency and Bankruptcy Code, the promoters can place bid only after clearing the overdue amount including interest and other charges. Sources said apart from these companies, others which have not yet submitted resolution plans can now submit them by December 23.

Bhushan Power and Steel was admitted by the insolvency court on July 26 on a plea by Punjab National Bank. Once a case is admitted, the IRP has to come up with a resolution plan within 180 days, extendable by another 90 days.

The source said that “The delay in finalising the evaluation criteria has made the IRP to extend the deadline for submitting resolutions plans. Also, there were hopes that some other companies might submit their plans. However, no addition to the list of suitors is expected, even as the promoter family is unlikely to take part in the final race.”

The evaluation criteria has now been finalised and approved by the CoC.

Source : Financial Express
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Steel makers want cap on iron ore production in Karnataka raised by 10%

Business Line reported that iron ore miners in Karnataka are bogged down by the cap imposed by the Supreme Court and an environment where players like JSW Steel (with the biggest steel mill in a single location) in Karnataka planning to utilise its full capacity, but not able to do so because of unsure supply of iron ore.

Mr Basant Poddar, Mentor, Federation of Indian Mineral Industries (FIMI) and MD, Mineral Enterprises Ltd, said “The cap on production was imposed in 2011 by the Supreme Court. Imposing it at that point in time was right since it was a war-like situation. But six years have passed since then. India is growing. It needs steel. And Karnataka can contribute. But the State has been reduced to a position of importing iron ore from South Africa, which is a hugely carbon negative exercise. There have been huge job losses in Karnataka due to this development. We are constantly knocking on the doors of the SC.”

He added “We have asked for only 10 per cent increase from the current production levels, that is, to 33 million tonnes from 30 million tonnes now. Even the Central Empowered Committee set up by the SC has recommended moving it up to 35 million tonnes from 30 million tonnes.”

Source : Business Line
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Tesla linked to New Steel International steel mill in Michigan - Report
Published on Wed, 06 Dec 2017

Electrek reported that a giant multibillion-dollar factory project has been seeking approval and funding in Michigan for months now under secrecy with the codename “Project Tim.” Information trickled down in filings over the last year, but they were always able to hide the company or companies behind the project. Now New Steel International Inc has confirmed to be behind the project and they are insinuating that other companies, including Tesla, are also behind the effort.

CEO John Schultes told Crain’s that other companies are involved He said “It’s a little too early to really go public with things. There are a lot of companies trying to make this happen.”

The publication claims that Schultes taunted “investor interest” in the project from GM, Tesla, and DTE Energy Co. When asked about the claim, Schultes responded “Whoever is telling you all of this is certainly well informed, but I’m not going to confirm or deny it.”

Tesla had previously been linked to the project, apparently only because it was said to have to do with renewable energy and it was when Tesla started talking about new Gigafactory projects in the US. This report is a new angle on Tesla’s potential involvement in the project.

Source : Electrek
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Rio Tinto board approves to develop intelligent Australian iron ore mine

Reuters reported that Rio Tinto next year will seek board approval to develop an “intelligent” iron ore mine at a cost of USD 2.2 billion, fully incorporating technologies such as robotics and driverless trains and trucks on a single site. Mr Chris Salisbury Chief Executive, Iron Ore said that feasibility study was underway to demonstrate the economics behind developing the Koodaideri mine in the Pilbara region of the state of Western Australia.

Rio Tinto extracts more than 300 million tonnes of ore annually in Australia, making it the world’s second-biggest iron ore miner after Brazilian giant Vale.

Mr Salisbury told Reuters that “We will bring all our technologies into a single place with a mine that is purpose-built to adapt those technologies. We are calling it our intelligent mine.”

According to Salisbury The Koodaideri lode would produce around 40 million tonnes per year by 2021, but could be expanded to yield 70 million tonnes or more at a later date.

Mr Salisbury said that the project fit into a strategy to produce ore tailored with iron content required by steel mill customers over simply mining as much as it can.

Iron ore accounted for more than two-thirds of Rio Tinto’s USD 6.064 billion in underlying earnings last year.

Rio Tinto recently ran its first autonomous iron ore train over a distance of almost 100 km (62 miles) as a part of its Autohaul project. It already runs much of its mining, transport and port logistics from an operations centre 1,500 km away in Perth.

Sainsbury also said that a shift in demand as China cleans up its steel industry will see cyclical premiums for higher-grade iron ore cemented as a permanent fixture in the market.

Source : Reuters
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FMG appeals against native title ruling in the Pilbara

The Guardian reported that Mr Andrew Forrest’s Fortescue Metals Group is appealing against a native title ruling covering more than 2,700 sq km of Pilbara land in Western Australia, including where the company operates its USD 110 billion Solomon Hub iron ore mine.

When the federal court recognised the Yindjibarndi people as having exclusive rights to the land in July, the company said it was likely to appeal the ruling.

Justice Steven Rares traveled to the Millstream Chichester national park in November to make his final determination, triggering a 21-day period for Fortescue to appeal.

On Monday the company said it had lodged a notice of appeal against the judgment, ensuring the long-running native title dispute will continue.

Fortescue previously said the court decision had no effect on the mining tenure at the Solomon Hub. Its chief executive, Mr Nev Power, said that the company had always welcomed recognition of Yindjibarndi native title.

Mr Nev Power said that “However, the federal court decision relating to the concept of exclusive possession has potentially wide-ranging implications for new investment in resources, agriculture and tourism.” Mr Power said the company would continue to provide employment for Aboriginal people to ensure communities benefited from the growth of Fortescue.

The claim was lodged in 2003, making it one of the longest-running native title claims in Australia.

Source : The Guardian
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Vale to use cash flow to pay dividends – Mr Fabio Schvartsman

Reuters quoted Mr Fabio Schvartsman CEO of Brazil's Vale as saying that, the world's top iron-ore producer, will use cash flow, which could reach USD 14-billion or USD 15 billion this year, to cut debt and pay dividends.

Speaking at an event in Rio de Janeiro, Mr Schvartsman said that the miner tended to generate USD 14-billion or USD 15-billion in cash in good or normal years, adding that 2017 was normal.

Mr Schvartsman without specifying a time frame said that "The first thing we are going to do with the cash is pay debt, and then we are going to make this company's shareholders happy as never before."

Mr Schvartsman said that cash generation could also help the company's debt rating and noted that paying very high dividends was becoming company policy.He added that "It is not our goal to keep cash."

Vale has said it wants to diversify its investments. Investors are awaiting Schwartzman's first annual investment plan, which will be released as part of Vale Day later this week.

Mr Schvartsman also said the company would try to improve capital allocation, which should lead to stronger financial results over the long term.

Investments in nickel have not yielded results the company had sought, he said, but Vale is trying to show that better results in the sector are possible.

Source : Reuters
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Bailadila Iron ore project under CCTV

Daily Pioneer reported that NMDC Ltd will soon be putting its Bailadila Iron Ore Mining project under a CCTV blanket for further enhancing security in the project area. Officials informed that notably, the company has made a capital expenditure of 4.76 crore as on September 2016 for development of its Bailadila iron ore mines during the current financial year.

It is also now going for construction of the 5th iron ore screening line at its existing screening plant number 2 at Bailadila Iron Ore Mine at Kirandul complex in Dantewada district of Bastar region.

It has also commenced the process for setting up the 2 million tonne per annum ‘iron ore processing plant’ at Bacheli in Bastar region of Chhattisgarh, officials informed.

It may also be recalled that NMDC has proposed to use its mine lease area at Deposit number 4 located at Bailadila range of hills at Bhansi near Bacheli in South Bastar’s Dantewada district in Chhattisgarh for meeting the raw material requirement 'exclusively' for its upcoming 3 million tonne per annum Integrated Steel Plant at Nagarnar, officials informed.

Source : Daily pioneer
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Hoa Phat to build USD 43.9 million post tensioning steel plant

Viet Nam Hoa Phat Group has decided to invest VND 1 trillion (USD 43.9 million) in building a high quality post-tensioning steel factory, Mr Vu Thi Anh Tuyet, deputy director of Hoa Phat Equipment and Accessory Company Limited, said that the plant is located in Dung Quat Economic Zone in the central province of Quang Ngai and will be the first high-quality steel factory in Viet Nam.

It is built to replace steel imports and add value to its closed production model of the Hoa Phat Dung Quat iron and steel production complex.

The project has a capacity of 160,000 tonnes per year, including three high-end products PC bar, PC Strand and PC Wire. These products are used in large-scale infrastructure projects that require high technology, high load capacity and safety, such as towers, viaducts, cross-sea bridges, high buildings and cables. Moreover, these products help optimise space and material costs, shortening the time of construction work.

The post-tensioning plant is located right next to the complex, resulting in significant savings in transportation costs and inventory, as well as meeting the production schedule and delivering the goods quickly. Thus, the advantageous location will lower the cost of products and raise competitiveness compared with imported goods.

The project will make use of opportunities to upgrade the value chain of Hoa Phat’s steel products. With a modern and synchronous production line from Europe, Hoa Phat post-tensioning steel factory has potential to meet the demand of related products, ensuring the highest quality.

According to Tuyet, Viet Nam imports 100 per cent of post-tensioned steel products from China, Thailand, Indonesia, Republic of Korea and Japan, with annual output of over 70,000 tonnes of PC Bar and PC Strand steel to build infrastructure in the country. In the first nine months of 2017, this figure increased to 85,000 tonnes, an increase of 21 per cent over the entire previous year.

Hoa Phat post-tensioning steel factory is expected to meet 100 per cent of the demand for construction of domestic infrastructure projects, supporting the country in actively investing in development, reducing dependence on the external market, restricting the bleeding of foreign currencies and providing the market with products of high quality and stability.

The plant is scheduled to be implemented within 12 months from the beginning of 2018, right after being allocated land, and officially launched in early 2019.

Source : Biz Hub
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Scunthorpe steel pensioners given extra time to decide on the future of their investments

Scunthorpe Telegraph reported that the deadline for the estimated 20,000 British Steel pensioners in North Lincolnshire to decide on the future of their investments has been extended. The original deadline of next Monday (December 11) has been put back until Friday, December 22.

The pensioners who are stake-holders in a GBP 15 billion plus fund have been given three options.

Those options are to transfer to a new fund set up with cash from Tata Steel UK, move with the present scheme to one under the control of the Pension Protection Fund or cash in their savings.

If they fail to meet the December 22 deadline, their savings will remain in the current scheme, to go into the hands of the PPF from March 2018.

Pension fund trustee chairman Allan Johnston said that "As a British Steel pensioner myself, I appreciate why our members are so keen to understand their options and to make the right choice for them and their families.

He said that "We have extended the deadline until December 22 to give members more time but we urge those who haven’t yet returned their completed option forms to do so before the deadline. We are conscious that some members have been trying to access independent financial advice and action has been taken to ensure that all firms contacting members are doing so on the basis of offering appropriate, independent advice and are not exploiting members.

"If members wish to get independent financial advice, we urge them to find an appropriate, regulated, independent financial advisor.”

Source : Scunthorpe Telegraph
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B-M counsels scandal-plagued Kobe Steel

Odwyerpr reported that Japan’s Kobe Steel, which in October acknowledged quality control problems on products shipped to auto, aviation, railroad and nuclear power companies for at least a decade, relies on Burson-Marsteller for strategic communications counsel. The WPP unit serves Kobe as subcontractor for its law firm, Paul Hastings LLP.

According to its contract, B-M’s purpose is to “assist the attorneys regarding the various PR implications of pending and/or anticipated legal proceedings and to assist in relation to such legal proceedings at the direction of counsel.”

B-M charges Hastings a guaranteed minimum retainer of USD 75K with that amount to be re-evaluated on January 31.

Its scope of work includes message development, media relations, digital/social media management, content creation, stakeholder communications, ally mobilization, opinion research and writing/editing of materials.

Kobe Steel, in November, issued a report that concluded that it “erred by elevating the pursuit of short-term profit over the maintenance of scrupulous quality standards,” according to the Nov. 10 New York Times.

Mr Hiroya Kawasaki CEO told a press conference there was a climate where employees didn’t speak up, and if they did, it wouldn’t have made a difference. He said that “As long as the revenue was coming in, management wasn’t interested.”

A second report on the Kobe scandal complied by outside experts is slated for release this month.

Source : Odwyerpr
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Moody's positiever over ArcelorMittal

Gepubliceerd op 7 dec 2017 om 09:38 | Views: 2.194

ArcelorMittal 16:11
26,11 -0,08 (-0,29%)

LONDEN (AFN) - Kredietbeoordelaar Moody's heeft zijn vooruitzichten voor ArcelorMittal verhoogd van stabiel naar positief. Het ratingbureau heeft de indruk dat 's werelds grootste staalconcern komende tijd kan profiteren van gunstige marktontwikkelingen. Arcelor heeft nu een Ba1-beoordeling.

Volgens Moody's is het kredietprofiel van het in Amsterdam genoteerde concern sterker aan het worden. Ook is Arcelor succesvol met zijn pogingen om de schuld terug te brengen. Moody's denkt dat de vrije kasstroom voorlopig positief zal uitvallen.
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Coking coal prices to stay above USD 200 in Q1 -Nippon Steel & Sumitomo Metal

Reuters reported that Nippon Steel & Sumitomo Metal Corp expects coking coal to stay above USD 200 a tonne through the January-March quarter amid lower supplies from Australia, which may drag on its earnings. Toshiharu Sakae, Nippon Steel’s executive vice president, told Reuters “The recent jump reflected tighter supplies in Australia. Slower output at some Australian mines following cyclones earlier this year and renewal works of some loading facilities at a Queensland port lent support to the prices.”

He added “Demand is not particularly heavy in China as it is going through a seasonal output cut, but demand in India is growing gradually.”

And while higher raw material costs would hurt the steelmaker’s earnings, solid demand for steel products at home and abroad could offset such expenses, he said.

Australian premium coking coal futures in Singapore have surged nearly 30 percent from a November low of USD 174 to above USD 220 a tonne in the first few days of December.

Source : Reuters
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Top 5 steel firms need to pay INR 29,000 crore to bid

Business Standard reported that promoters of five steel majors undergoing insolvency resolution will have to cough up a total of at least INR 29,000 crore to be eligible to submit bids and retain their companies. Some other companies trying to resolve their bad loans under the Insolvency and Bankruptcy Code (IBC) are seeking details from lenders about the principal and interest they have to pay for being able to bid for their own assets.

The recent amendments to the IBC practically barred promoters from re-acquiring their own assets, leaving only a small window to convert their non- performing assets into standard assets by paying the over dues. According to steel companies, which have had discussions on this issue with lenders, the overdue includes the principal in default along with interest which has not been paid unless the lenders have recalled the entire loan.

As per report, , according to those who have shown interest in bidding for the asset, the overdue amount based on this definition is estimated at
Bhushan Power – INR 10,000 crore
Bhushan Steel - INR 6,000 crore
Electrosteel Steels - INR 2,500 crore
Essar Steel - INR 7,000 crore,
Monnet Ispat - INR 3,500 crore

The estimated payout by these companies will be little more than a fifth of their total debt pegged at around INR 138,177 crore as of financial year 2016.

Source : Business Standard
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Egypt to retain tariffs on steel rebar for 5 years

Egypt will maintain tariffs on steel rebar from China, Turkey, and Ukraine for a period of five years. The tariff was first implemented in June to protect local manufacturers and set at 17 percent for Chinese steel, 10-19 percent for Turkish steel, and 15-27 percent for Ukrainian steel.

Tarek el-Geyoushi, member of the Metallurgical Industries Chamber (MIC) of the Federation of Egyptian Industries, said “The decision by Egypt’s Trade Ministry to maintain tariffs on steel rebar from China, Turkey, and Ukraine for a period of five years will not lead to an increase in steel prices in Egypt. Imposing tariffs aimed at supporting local industry and did not mean baring imports from all countries, saying that the decision was fair in light of dumping practices.”

Geyoushi said that the decision would not lead to price increases or decreases in the local market because prices in local factories are tied to production inputs.

Source : Egypt Today
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RINL Vizag Steel makes rapid strides in production & sales this FY

RINL-Visakhapatnam Steel Plant has made rapid strides by achieving significant growth in production and turnover during April-November’17 of the current fiscal. Hot Metal 12% growth; Liquid Steel 14%; Saleable Steel 15%; Significant growth was also registered from the finishing mills of expansion Viz: Wire Rod Mill – 2, Special Bar Mill and Structural Mill during the period; Turn over 31% growth.

Source : Strategic Research Institute

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Japan Engineering Network and SMS group KK bundles competences in repair service for continuous casting plants

Japan Engineering Network Co (JEN) and SMS group KK, based in Tokyo, Japan, have signed a business partnership agreement on repair services for continuous casting molds. This cooperation aims to strengthen SMS group’s maintenance and repair service presence for continuous casting plants in Japan. Having JEN, a highly customer-oriented specialist company with high-grade workshop equipment and a strong local supply chain network, as a partner is a perfect complement to SMS group’s competences in plant maintenance and repair services and in quality control.

Source : Strategic Research Institute
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UK pension Ombudsman flooded with British Steel pension complaints

FT Adviser reported that the Pensions Ombudsman has received more than a hundred complaints from members of the British Steel Pension Scheme. A spokesperson for the ombudsman said that the steelworkers complained about matters to do with the scheme, not the advice received on any pension transfers.

The spokesperson added that it is currently categorising the complaints according to the area they fall in.

The 130,000 members of the failed scheme have about three weeks to decide whether to move their defined benefit pension pots to a new plan being created, BSPS II, or stay in the current fund, which will be moved to the Pension Protection Fund.

Of the members, 43,000 are deferred, which means transferring out of their pension is also an option for them.

It is alleged that thousands of members didn't receive all the information necessary about their pensions to be able to make an informed decision on the matter.

FTAdviser reported last week that several steelworkers appeared to be transferring out their pensions after being lured by cheap deals by unregulated introducer firm Celtic Wealth Management & Financial Planning, which then referred the clients to advice firm Active Wealth.

The Work & Pensions select committee is due to question financial advisers about the advice given to steelworkers to transfer their defined benefit pensions out of the scheme.

Pensions expert and founder of Pension Playpen, Henry Tapper, and Al Rush, principal at Rutland-based Echelon Wealthcare, visited Port Talbot to speak to the scheme members and found there was little evidence of financial advisers suggesting anything other than transfers to the individuals.

Mr Tapper will be attending the Westminster hearing with two members of the British Steel Pension Scheme.

Source : FT Adviser
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