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Liberty Steel announces major restructuring plan

GFG Alliance and Liberty Steel have provided an update on the restructuring of their steel businesses.

Outlined by the group’s restructuring and transformation committee (RTC), the aim of the developments is to “pave the way for a refinancing that will enable GFG Alliance to pay back creditors following the collapse of its main lender Greensill Capital”.

The group’s chief restructuring officer Jeffrey Stein said: “We are aware of the significant challenges facing the group but are pleased that we are making good progress to refinance, repay creditors and refocus the group on our core assets. Much remains to be done but we are optimistic that a vibrant, well-funded, profitable and sustainable business will emerge as we systematically restructure and transform the group.”

Since the RTC was established in May, a strategy has been developed that will see the company focus on its primary metal production hubs, associated downstream units, and renewable energy developments. The restructuring will support GFG Alliance’s refinancing process, which has been boosted by the strength of its core assets and record steel, aluminium and iron ore prices.

The strategy will see Liberty Steel focus on its core business units, including InfraBuild and Liberty Primary Metals Australia, as well as Liberty Ostrava and Liberty Galati steelworks. These will continue to be operationally and commercially developed to improve their generation of cash and profits.

Additionally, the plan incorporates a restructured and refocused UK business as well as more closely integrating the European downstream steel plants into Liberty’s major businesses.

In the country, the firm is continuing to assess a sale of its UK aerospace and special alloys steel business in Stocksbridge. The firm says this sale will allow Liberty to focus on developing its Rotherham plant, including its low carbon emitting electric arc furnaces into a competitive two million tonnes Greensteel plant, one of the largest in Europe.

Alongside this, on 2 July the current managing director of Liberty Steel UK Jon Ferriman will be stepping down. Taking his place will be Roy Chowdhury, who will join as its chief executive and brings with him 30 years of industry and turnaround experience. He will be joined by Anton Krull as the firm’s new chief financial officer and brings with him 20 years of corporate finance and restructuring experience.

Additionally, RTC has also been exploring strategic options regarding the future of the UK engineering business. The process is focused on identifying original equipment manufacturers.

In Europe, meanwhile, the group is planning to merge its downstream businesses - these being Liberty Liège-Dudelange in Belgium and Luxembourg and Liberty Magona in Italy - into the Liberty Galati organisation to optimise operational integration. These links will allow it to offer a significantly broader range of high quality products to its existing customer base across central and south eastern Europe.

The restructuring is expected to lead to synergies across a range of functional areas, including procurement, IT and accounting. The company will also continue in its constructive dialogue with unions and works councils on these changes.

In Australia, the RTC continues to explore potential strategic partnership or sale options for the Cultana Solar Farm and Playford Battery projects in South Australia. The options under consideration include SIMEC retaining an interest and the GFG Alliance retaining priority access to this energy for its Whyalla development plans.

Commenting on the plans, GFG Alliance’s executive chairman Sanjeev Gupta said: “Despite the difficult circumstances, GFG Alliance contains many high quality businesses which are performing strongly in record markets where customer demand and pricing are strong. By refocusing our businesses, we will protect more jobs and lay the foundations for future sustainable growth. The refinancing of the group, which is progressing well, brings closer the point of being able to honour our obligations to creditors.”

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