Liberty Steel has said it plans to sell its Yorkshire-based aerospace steel business as part of a restructuring deal while trying to ensure its survival.
The steelmaker, which is owned by metals magnate Sanjeev Gupta, said on Monday it was in talks with Credit Suisse, a large creditor, about deals that would give it time to pay off its debts.
Talks with Credit Suisse include a plan to sell its aerospace and special steel alloys business in Stocksbridge, South Yorkshire, as well as a nearby partner facility and another in the West Midlands. It would also give Gupta time to refinance a separate plant in nearby Rotherham. Approximately 750 people work in Stocksbridge and 650 in Rotherham.
A deal with Credit Suisse would help Gupta allay fears about the future of the company and its 3,000 UK workers.
Liberty has been in crisis since March after the collapse of its main lender, Greensill Capital. Since then, he has faced a number of threats, including legal claims from Credit Suisse to claim money, low demand from the affected aerospace industry, and the disclosure of a months-long fraud and money laundering investigation by the Serious Fraud Office.
Credit Suisse was one of Greensill’s biggest backers, and has taken legal action to try to get its money back from Liberty companies in the UK and Australia.
Liberty said it was in “advanced discussions” about a moratorium agreement with Credit Suisse in relation to an Australian business that would see the bank fully reimbursed. Talks about the UK business have not progressed that far.
Credit Suisse bankers have described the talks as useful, but are waiting cautiously to see if Gupta can comply with the proposal, which could help return billions of pounds to his investors.
Credit Suisse has been trying to recoup money for clients who invested in Greensill loans that were packaged as investments and sold through a series of Credit Suisse funds. Those mutual funds were worth nearly $ 10bn (£ 700m) before they closed in March.
The bank has requested the liquidation of several Liberty Steel companies in the UK and Australia while trying to recover cash from investors.
Liberty said the Stocksbridge site was “a unique, high-quality business serving marquee customers in aerospace, automotive and other highly engineered applications,” but that it is “not central to Liberty’s vision of Greensteel.” .
Credit Suisse declined to comment on the Liberty announcement.
A spokesperson for the steelworkers unions – Community, GMB and Unite – said they were encouraged by the apparent progress in the talks, but added that “we urgently need a solution to inject cash into the UK,” Liberty arm .
Gupta must fulfill a previous promise that no steel plants will close under his supervision, the spokesperson added.
The spokesperson said: “Liberty must act as a responsible salesperson and run a transparent sales process that fully involves the unions. We look forward to meeting any potential buyers to discuss their plans and test their commitment to the workforce and our industry. “
George is Digismak’s reported cum editor with 13 years of experience in Journalism