STEEL workers at a North-East firm facing a takeover bid will receive a pay rise, union bosses have revealed.

The Community union says it has agreed a deal with Tata Steel to give staff a two per cent increase, with a further 1.5 per cent drawn down from bonuses.

They said the rise will cover workers at Tata’s loss-making long products division, which includes the Teesside Beam Mill, at Lackenby, near Redcar, and the Skinningrove special profiles plant, in east Cleveland.

Employing about 750 North-East staff, the business also includes a rail consultancy in York and distribution sites in Teesside and Newcastle.

The pay changes come as US billionaire Gary Klesch firms up his bid for the steel mills.

Swiss-based Mr Klesch, a former Ohio steel mill electrician, remains in talks with Tata, with due diligence expected to run into next year.

Steve McCool, Community national officer, said the pay increase will be backdated to April 2014, though it will not come into effect until the New Year.

He said: “These negotiations have been the most difficult and drawn out I’ve experienced in all my years as a full-time trade union officer.

“In May, the company said it was a million miles from achieving its annual plan, due to a series of production disasters, adding any pay award would be difficult.

“We took the difficult decision to suspend negotiations at the time to allow the company to re-group and return to the table with an improved offer.

“They resumed in September, but the situation hadn’t changed significantly, and in October we got the hammer blow over the Long Products sale.

“However, we stood firm under very challenging circumstances and now have what I believe is a good deal in the current situation.”

A Tata Steel spokesman added: “A proposed pay settlement has been reached with our unions on behalf of the majority of our UK employees.

“The trades unions are now consulting with their members on the terms of that deal prior to a formal agreement.”

Mr Klesch, who specialises in buying troubled companies, previously visited the North-East to look at Tata’s sites and has played down worries over job cuts in any takeover.

However, unions and MPs raised fears over a lack of staff consultation in Mr Klesch’s approach and called for other options to rival his Klesch Group’s interest.

Tata’s Hartlepool pipe mill, which supplies steel for energy projects, is not part of the proposed deal.