British Steel is on the verge of administration as it continues to lobby for government backing, sources say.
The UK’s second-biggest steel maker had been trying to secure £75m in financial support to help it to address “Brexit-related issues”.
If the firm does not get the cash it would put 4,000 jobs at risk and endanger 20,000 in the supply chain.
Company sources said that the direction of talks with the government would become clearer in the coming hours.
British Steel’s main plant is at Scunthorpe, but it also has sites in Teesside, Cumbria and North Yorkshire.
As first reported on Sky News, according to insiders the request for emergency financial support from the government has been reduced from £75m to about £30m.
The report said British Steel shareholder Greybull Capital and lenders had agreed to pump new money into the firm.
Unless a deal is reached by Tuesday afternoon, the firm could go into administration within 48 hours. EY would be expected to be appointed as administrators on Wednesday.
In a statement, the Department for Business, Energy and Industrial Strategy (BEIS) said: “As the business department, we are in regular conversation with a wide range of companies.”
In April, British Steel borrowed £100m from the government to enable it to pay an EU carbon bill, so it could avoid a steep fine.
Last Thursday, British Steel said it had the backing of shareholders and lenders and that operations continued as usual while it sought a “permanent solution” from the government to its financial troubles.
It is understood that along with administration, nationalisation or a management buyout are being discussed as fall-back options for the company.
British Steel’s troubles have been linked to a slump in orders from European customers due to uncertainty over the Brexit process.
The firm has also been struggling with the weakness of the pound since the EU referendum in June 2016 and the escalating trade US-China trade war.
Greybull Capital, a private equity firm, rescued Tata Steel’s long products business during the depths of the steel crisis in 2016, saving more than 4,000 jobs.
It then rebranded the company as British Steel and recently returned it to profit.