Liberty steel: Sanjeev Gupta’s GFG Alliance to inject £ 50million to restart UK steel operations

GFG Alliance, the parent company of British metallurgical baron Sanjeev Gupta, Liberty Steel, announced on Sunday that it would inject £ 50million, or roughly Rs.510 crore, to enable the restart of the Rotherham electric arc furnace by Liberty Steel UK.

Britain’s third-largest steelmaker was in distress after its main lender Greensill Capital collapsed in March.

“GFG’s injection of funds to restart the operations of Liberty Steel UK (LSUK) is an important step on the road to building a sustainable UK business,” said Sanjeev Gupta, executive chairman of GFG Alliance. “This will give us time to prove that operations can run efficiently, which will allow us to finalize a longer debt restructuring.”

The funds will be allocated to LSUK through a new, separate legal entity, Liberty Capital, the company said in a statement.

LSUK will operate normally with working capital growth funding approved by Liberty Capital.

“This arrangement will ensure a swift and efficient deployment of the £ 50million initial funds in the UK, allowing LSUK to restart operations,” the statement said.

Liberty Capital’s capital injection will also be used to increase the capacities of its Greensteel Rotherham electric arc furnace.

“The investment plans at Rotherham will increase production capacity, increase employment and introduce new products,” the company said.

Gupta, founding chairman of GFG Alliance, which generates $ 20 billion in revenue, was waging his biggest battle to save his metals-to-energy conglomerate after the collapse of its main lender Greensill Capital and filing for bankruptcy earlier this year.

The company was actively seeking short-term financiers, Gupta told ET in a previous interaction.

This new development comes at a time when the UK steel industry is facing a crisis of high costs due to rising energy prices. Gas prices have risen 250% since January, according to reports, dramatically increasing costs for UK steelmakers.

At the same time, Credit Suisse Asset Management (CSAM) accepted a debt restructuring plan from Liberty Primary Metals Australia (LPMA). The deal will provide a stable financial platform for the LPMA and secure a recovery plan for creditors, the company said in a press release.

“The strength of the LPMA business will enable it to make a substantial upfront payment to Greensill Bank and CSAM, which have been closely involved in GFG’s work to refinance and restructure its portfolio following the collapse of GFG’s main lender, Greensill Capital, ”he said.

Under the agreement, the balance will be paid in installments to CSAM and Greensill Bank until the amended due date of June 2023.

After the collapse of Greensill, some GFG Alliance companies faced legal action over payment default.

American Industrial Partners (AIP) announced last week that it had acquired the Alvance smelter, GFG Alliance’s aluminum company in Dunkirk, and two other entities after the Gupta metals conglomerate defaulted on its outstanding loans.

Tata Steel initiated proceedings in April against Liberty Specialty Steels, Liberty House Group PTE and Specialty Steel UK, all of which are part of GFG Alliance, for alleged missed payments in the 2017 acquisition.

A request from GFG to the UK government for 170 million euros to support the UK operation was rejected by the government.

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