Liberty Steel plans to sell Yorkshire plant to stay afloat
Sale of aerospace supplier proposed as lenders try to claw back cash after Greensill collapse
Last modified on Mon 24 May 2021 08.50 EDT
Liberty Steel has said it plans to sell its aerospace steel business based in Yorkshire as part of a restructuring deal as it tries to ensure its survival.
The steelmaker, which is owned by the metals magnate Sanjeev Gupta, on Monday said it was in talks with Credit Suisse, a large creditor, over agreements that would give it time to repay its debts.
Talks with Credit Suisse include a plan to sell its aerospace and special alloys steel business in Stocksbridge, South Yorkshire, plus an associated facility nearby and another in the West Midlands. It would also give Gupta time to refinance a separate plant in nearby Rotherham. About 750 people work at Stocksbridge and 650 at Rotherham.
A deal with Credit Suisse would help Gupta to allay fears for the future of the company and its 3,000 UK workers.
Liberty has been in crisis since March after the collapse of its key lender, Greensill Capital. Since then it has faced a host of threats, including legal claims by Credit Suisse to reclaim money, low demand from the stricken aerospace industry, and the revelation of a months-long fraud and money-laundering investigation by the Serious Fraud Office.
Credit Suisse was one of the largest backers of Greensill, and it has been pursuing legal action to try to recoup its money from Liberty businesses in the UK and Australia.
Liberty said it was in “advanced discussions” over a standstill agreement with Credit Suisse in relation to an Australian business that would see the bank repaid in full. Talks over the UK business have not progressed as far.
Bankers at Credit Suisse have described the talks as helpful, but are cautiously waiting to see whether Gupta can deliver on the proposal, which could help return billions of pounds to its investors.
Credit Suisse has been trying to reclaim money for customers who invested in Greensill loans that were packaged up as investments and sold off via a series of Credit Suisse funds. Those investment funds were worth nearly $10bn (£700m) before they were closed in March.
The bank has petitioned to wind up various Liberty Steel companies in the UK and Australia as it tries to claw back investor cash.
Liberty said the Stocksbridge site was a “unique, high-quality business servicing marquee customers in aerospace, auto and other highly engineered applications” but that it “is not core to the Greensteel vision of Liberty”.
Credit Suisse declined to comment on Liberty’s announcement.
A spokesperson for the steelworkers’ unions – Community, GMB and Unite – said they were encouraged by the apparent progress in talks, but added “we urgently need a solution to inject cash into the UK” arm of Liberty.
Gupta must live up to a previous promise that no steel plants will close on his watch, the spokesperson added.
The spokesperson said: “Liberty must act as a responsible seller and run a transparent sales process which fully engages the trade unions. We will expect to meet any potential buyer to scrutinise their plans and test their commitment to the workforce and our industry.”
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