Liberty Steel has announced its advancing with its refinancing and restructuring process in the UK and Australia.
The news comes after “very constructive and productive meetings” between parent company GFG Alliance’s Sanjeev Gupta and bank Credit Sussie. The two are in advanced discussions to reach a formal standstill agreement on its Liberty Primary Metals Australia company while refinancing is completed that will repay Credit Sussie out in full.
According to the BBC, the investment bank lost more than £1bn when Gupta’s main financial backer Greensill Capital went bust in March. It’s also been announced that the UK’s Serious Fraud Office is investigating suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct within GFG Alliance, including financing arrangements with Greensill Capital.
As part of its restructuring process, GFG Alliance subsidiary Liberty Steel will look to sell its aerospace and special alloys steel business in Stocksbridge, Sheffield - which it says is “not core to the greensteel vision of Liberty”. The sale will involve some of its downstream plants including the narrow strip mill at Brinsworth and Performance Steels at West Bromwich.
Liberty Steel has also already begun the formal sale process of Liberty Aluminium Technologies and Liberty Pressing Solutions.
The move by the UK’s third largest steel manufacturer will allow it to focus on developing its Rotherham plant, including turning its electric arc furnaces into a two million tonne recycled greensteel plant. This, it is aimed, will make use of some of the millions of tonnes of steel scrap currently exported by the UK.
In response to the news, shadow business secretary Ed Milband said it’s “absolutely vital” the government and Liberty secure legal assurances that the Stocksbridge plant will remain open and the workforce will be protected.
He added: “Crucially we also need assurances about all of Liberty’s other plants. The government must show it has a plan B to protect the long-term future of our steel industry, including at Liberty - and public ownership must remain on the table.”
Responding to the news, business secretary Kwasi Kwarteng told the House of Commons business select committee that the Stocksbridge plant had “good assets” that should find a private sector buyer.
The minister said: “They are putting assets up for sale, they wouldn’t be doing that if they didn’t think there were buyers in the market. The assets are good assets, the workforce is dedicated, the managers of the plants are very experienced and I’ve spoken to them very frequently.”
Commenting on the thought of nationalisation, he said it would be an “extreme occurrence which is unlikely to happen”.