Liberty Steel to merge Europe downstream assets, seeks to sell UK unit: company

Liberty Steel Group will merge its downstream steel operations in Italy, Belgium, Luxembourg and Romania as part of an ongoing financial restructuring, the UK-based company announced June 28.

This merger is part of a strategy to help Liberty Steel Group pay off creditors and refocus on core assets. It was adopted by the company's restructuring and transformation committee (RTC) in May to focus on its most profitable assets and "fix or sell underperforming units" following a cash squeeze arising from the collapse of its main financier, Greensill Capital, in March.

In Europe, attention will now focus on developing operations, cash generation and profits at the Liberty Ostrava and Galati works, while in Australia, InfraBuild and Liberty Primary Metals Australia (LPMA) are also classed as core business units. A buyer is sought for the UK specialty steel operations.

Liberty Steel's European downstream businesses, Liberty Liège-Dudelange (Belgium and Luxembourg) and Liberty Magona (Italy) will merge into the Liberty Galati organization in Romania to optimize operations, the group said in a June 28 statement. Liberty Galati, the largest integrated steelworks in Romania, will become the primary supplier of hot rolled coil to Liberty's downstream businesses. These businesses will broaden the product range offered to the existing customer base across central and southeastern Europe, Liberty said, without elaborating on which products will be added.

"The initial stages of that restructuring programme have already started, with the first supplies of HRC from LIBERTY Galati expected to arrive at the downstream plants within the next few weeks, allowing them to restart their lines soon afterwards," the statement said. "The restructuring is expected to lead to synergies across a range of functional areas, including procurement, IT and accounting. The company will continue in its constructive dialogue with unions and works councils on these changes."

A company spokesman declined to give current production levels at the works or indicate how levels might change as a result of the operational changes.

Liberty Steel Group has a total steel rolling capacity of 20 million mt/year across the UK, continental Europe, Australia, the United States and China, serving the construction, energy, aerospace, automotive and infrastructure sectors. Around half its capacity is in Europe.

Seeking UK sale

Liberty Steel UK's Stocksbridge specialty steel works has been identified as no longer core to the group's future. Liberty "is continuing to assess a sales process for its UK aerospace and special alloys steel business in Stocksbridge," it said, declining to reveal whether there had been any interest among prospective purchasers. "This sale will allow LIBERTY to focus on developing its Rotherham plant, including its low carbon emitting electric arc furnaces, into a competitive two million tonnes GREENSTEEL plant, one of the largest in Europe".

Earlier this year, a Liberty spokesperson noted demand for specialty steel for the aerospace industry had slumped due to market and pandemic-related factors.

Liberty Steel Group, together with business management consultant Alvarez & Marsal, is also seeking to sell its UK engineering business serving automotive OEMs. Liberty's parent GFG Alliance and key customers will continue to work together to provide adequate cash flow to keep the business solvent until the sale process is completed, the statement said.

Australia refinancing progress

GFG Alliance and Credit Suisse Asset Management have agreed a formal standstill agreement with regard to LPMA which will enable the business to complete full refinancing, and to pay out LPMA's Greensill debt in full, according to the statement.

The RTC continues to explore potential strategic partnership or sale options for the Cultana Solar Farm and Playford Battery projects in South Australia, Liberty Steel Group said.

The options under consideration will include GFG's energy subsidiary SIMEC retaining an interest, with GFG retaining priority access to this energy for its Whyalla steelworks and mining development plans.

"This will expedite ways to power the Whyalla operations with low cost renewable energy, which is key to GFG's future ambitions to scale up production and introduce hydrogen-based steelmaking," it said.

Liberty Steel Group targets reaching carbon neutrality in its operations by 2030.