British Steel Bidder Faces Legal Hurdle Over Brazilian Mine Dispute
EXCLUSIVE
The financier leading a potential rescue bid for British Steel is entangled in a significant legal dispute with French industrial giant Imerys, The Telegraph can disclose. The case raises questions about the backdrop against which a critical deal for the UK's industrial future is being proposed.
Michael Flacks, a specialist in distressed assets known for his past interest in retailers like Laura Ashley and Wilko, is contesting a New York court ruling from August 2023. The court found he improperly withheld payments to Imerys following a 2024 agreement to acquire a mining business, after learning the operation was barred from developing a key Amazonian mine on environmental grounds. He was ordered to pay €9.5m (£8.2m) in outstanding debts. Flacks has since launched a counter-suit against Imerys in France.
Flacks, whose fortune is estimated at £1.68bn, dismissed the US judgment as immaterial to his pursuit of British Steel. The government is seeking a buyer for the steelmaker after its Chinese owner, Jingye, moved to wind down operations.
In an interview, Flacks confirmed his intent to acquire British Steel and merge it with Italy's troubled Ilva steelworks—a deal for which he claims to have €5bn in financing lined up. However, he laid out stringent conditions, stating the UK government must fund an estimated €3bn bill to electrify Scunthorpe's blast furnaces, seen as vital for long-term viability. "Nobody in their right mind can afford to do it privately," he said.
The Miami-based investor, who began his career in market stalls, has a history of bargain acquisitions, including the Irish retailer A Wear. He describes a focus on "non-sexy" commodity and industrial businesses, arguing the UK sector holds "low-hanging fruit."
Whitehall sources indicated no formal talks have commenced regarding the Scunthorpe plant. Imerys declined to comment on ongoing proceedings.
Analysis & Commentary
The legal clash underscores the complex, high-stakes world of industrial turnaround investing. Flacks's ambitious plan hinges not only on navigating international litigation but on securing unprecedented government support—a risky proposition for a key national asset.
David Chen, Industry Analyst at Metallo Insights: "This isn't just about one investor's legal troubles. It highlights the extreme difficulty of reviving foundational industries. The required public investment Flasks mentions is a political minefield, especially with a general election looming."
Sarah Pendleton, Former Union Representative, Scunthorpe: "Workers here are tired of being a bargaining chip. We need certainty and a owner committed to the long haul, not another financier with a spreadsheet and a history of quick flips. This legal dispute is a massive red flag."
Marcus Thorne, Investment Director at Calder Capital: "Flacks's model is high-risk, high-reward. His legal battle is a concern, but his ability to structure complex deals and secure financing shouldn't be dismissed outright. The government's role will be the ultimate decider."
Anya Petrova, Columnist, 'The Industrial Chronicle': "Are we seriously considering entrusting a strategic national asset to someone currently suing and being sued over a botched mine deal? This is farcical. The government must look beyond the 'billionaire saviour' narrative and conduct extreme due diligence."