Liberty Steel nears debt restructuring deal with creditors

Liberty Steel is inching towards a deal with its creditors to restructure its debt as the struggling company owned by metals tycoon Sanjeev Gupta seeks to fend off insolvency proceedings against it.

Liberty is part of metals tycoon Sanjeev Gupta’s GFG Alliance which owes $1.2 billion to clients of the Swiss bank Credit Suisse.

After several months of negotiations, an in-principle agreement was reached with the creditors including Greensill Bank and Credit Suisse aiming at its refinancing, Liberty said in a statement.

Details of the deal are yet to be finalised but the creditors have adjourned the winding up petitions against Liberty’s entities in the UK. The proceedings were set to start on November 30.

The statement said Liberty and Greensill Bank were also “in the process of negotiating a similar term sheet” for the debt restructuring of the steel company’s European businesses.

Liberty Steel Group chief transformation officer Jeffrey Kabel said the agreement would provide recovery for the creditors and “significantly deleverage and derisk” the steelmaker.

“This is a major step forward in our restructuring and transformation and we will now work at pace with the creditors to prepare and execute the agreement,” Kabel said.

However, the Financial Times reported citing sources that the creditors would recoup a maximum of 55 per cent of the debt from the deal, “though there is an expectation it would be significantly less”.

GFG Alliance entities have been the subject of the UK’s Serious Fraud Office and French police over suspected fraud and money laundering but the group has denied any wrongdoing.

While GFG’s fortunes took a beating after the collapse of Greensill last year, soaring energy costs fuelled by Russia’s war on Ukraine significantly impacted Liberty Steel’s operations in its Rotherham and Stocksbridge plants in South Yorkshire.

The two plants employ close to 2000 while the wider GFG has a workforce strength of 35,000 worldwide.