A £50 million cash injection is being made by Liberty Steel, which will safeguard hundreds of jobs in the UK.
The announcement, affecting its plant in Rotherham is part of a wider restructure of GFG Alliance, Liberty’s owner, which was forced to seek funding when its key lender, Greensill Capital, collapsed.
The cash will allow the Rotherham plant to reopen after being closed since spring.
Jeffrey S Stein, chief restructuring officer, said: “I’m pleased to report a significant advance in GFG Alliance’s global restructuring.
“The debt restructuring we have agreed for Liberty Primary Metals Australia gives the business clarity and stability and secures a clear recovery plan for creditors.
“The funding we are injecting to Liberty Steel UK puts it in a strong position for business transformation and debt restructuring.
“The next stage in our global refinancing will be in Europe where a significant number of new lenders are expressing interest in refinancing our steel assets.”
Jeffrey Kabel, chief transformation officer, said: “The injection of £50 million of shareholder funds into Liberty Steel UK is an important step in our restructuring and transformation.
“It will help to create sustainable value, ensure that Liberty has the ability to raise and deploy capital quickly in the UK and enable our businesses to demonstrate their potential and agree long-term debt restructuring.”
Sanjeev Gupta, executive chairman of GFG Alliance, said: “Through the hard work and determination of our team, our Australian integrated operations are now profitable and performing the best they have for many years.
“The deal we have agreed today provides a stable financial platform for our LPMA business and secures a recovery plan for Credit Suisse Asset Management and Greensill Bank following the collapse of Greensill Capital.
“I’d like to thank all our stakeholders – government, union representatives, customers, suppliers and of course our employees and the local community – for the support they’ve shown GFG Alliance as we managed our way through the challenges created by the Greensill collapse.
“At the same time GFG’s injection of funding to restart the Liberty Steel UK operations is an important step on our road to creating a sustainable UK business.
“It will allow time to prove the operations can run efficiently which will enable us to finalise longer debt restructuring.
“The plan highlights the progress we have made since Greensill’s collapse and has secured the support of both creditors and unions.”
Roy Rickhuss, general secretary of the Community union, said: “This news is well overdue, but it’s an important step in the right direction and demonstrates that GFG can raise funds for the UK.
“Huge challenges remain but the workforce is ready to get back to making the best steels money can buy, and the £50 million injection will enable us to restart steelmaking. The Government must play their part and act now to protect our industry from the consequences of soaring energy prices.
“Other European countries have already acted, and Britain’s steelworkers want to know why our politicians are sitting on their hands. Brexit was supposed to make it easier for the Government to back British industry and British jobs, but we’re just seeing the same old hand-wringing and excuses for doing nothing.”
Local MP and Labour’s shadow defence secretary John Healey said: “This is a breakthrough after months while Liberty workers have been left in limbo.
“Liberty is at the heart of steelmaking in Rotherham, and we’ve been holding our breath for the working capital to restart production.
“But £50 million won’t be enough for long, so full long-term refinancing for Liberty UK now needs to follow rapidly from the deal for Liberty Australia. Only then will Rotherham breathe more easily.”
Rotherham MP Sarah Champion said on Twitter: “Hugely welcomed news. Now the Government needs to play its part and commit to use British steel in its infrastructure projects & addressing the high business rates and energy costs.”
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