Liberty Steel, the third-biggest steel producer in UK, has reportedly announced new plans to sell its Stocksbridge steel plant as part of its ongoing major restructuring plan. This move would effectively allow the firm to pay back one of its key creditors in full.
The announcement came after a meeting in Dubai between Liberty founder Sanjeev Gupta and Credit Suisse representatives.
Credit Suisse lost almost £1 billion when the main financial backer of Mr. Gupta, that is Greensill Capital, went bankrupt in March. The founder of Liberty is now struggling to keep his UK-based operations running, putting up to 5,000 steel jobs at Liberty Steel are at risk.
The investment banking firm has agreed to halt their court proceedings against Mr. Gupta's business estate while the Stocksbridge sale is conducted.
The sale would also comprise of downstream plants of Stocksbridge, including the Brinsworth narrow strip mill as well as Performance Steels located at West Bromwich, which would be launched soon.
Reliable sources close to the steelmaker admitted that it was not quite clear as to what, if any, value might be released in a sale.
Adding further they stated that firm was also considering other options apart from complete sale, which includes JVs with third parties.
The offloading of Stocksbridge, however, will reduce the demands on the entire group’s capital and can be attractive to creditors such as Credit Suisse. This move would enable Liberty Steel to concentrate on its Rotherham plant, which is known to recycle scrap steel into brand-new steel.
Reliable sources close to Credit Suisse described the developments as “moving slowly towards a solution”. But, insiders at Liberty Steel conceded that the introduction of investigations into the relationship between Liberty as well as its present-defunct supporter, Greensill, by both the Financial Conduct Authority and Serious Fraud Office was a complication in refinancing Liberty Steel.
As per one of the spokesperson of NTUSCC, Stocksbridge as well as its downstream plants are advisedly important businesses crucial to the aerospace, energy and defense sectors of the country.
Source credit: https://www.bbc.co.uk/news/business-57230168