The UK government is likely to enter exclusive talks with Turkish military pension fund Oyak about the sale of British steel, The Guardian has reported.

According to a source who took part in a conference call with the business secretary, Andrea Leadsom, said three bidders have been in the running, but that two of them will be excluded over the next few days, the newspaper said.

The frontrunner is reportedly Oyak-owned Ataer Holdings, and the company is expected to be announced as the preferred bidder by the government’s official receiver David Chapman and EY, who is managing the sale.

A final deal likely to be dependent on the extent of the government’s financial support.

Talks have been accelerated over the past weeks due to pressure from lenders, as British Steel’s operations have been funded by the government while talks continue. If the company had collapsed, the newspaper said, the government would have had first call on any money that could be retrieved, limiting the extent of creditor refunds.

A spokesperson for the Department for Business, Energy and Industrial Strategy told The Guardian: “This government will leave no stone unturned to get a good solution for British Steel at Scunthorpe, Skinningrove and on Teesside.”

If discussions with Ataer break down, the two bidders Liberty House, led by Indian-born metals tycoon Sanjeev Gupta, and Greybull Capital, the investment group which owned British Steel when it collapsed.

Oyak pension fund is also the largest shareholder in Turkish steelmaker Erdemir.

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