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ArcelorMittal, JSW among suitors for Liberty Steel French units: sources

Highlights

Companies seek synergies as they look to buy

French government has backed units with loans

Rail steel market attractive for its stability

Steelmakers Acciaierie Venete, ArcelorMittal, Beltrame, JSW and Saarstahl and two private equity firms are interested in acquiring Liberty Steel French units Ascoval and Hayange, sources close to the matter told S&P Global Platts May 27.

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Liberty put specialty steelmaker Ascoval and rail producer Hayange on the market together in May amid the metal group's ongoing financial troubles after its main financier, Greensill Capital, filed for bankruptcy in March, Platts reported May 17.

The French government in March loaned Eur20 million to the two plants to cover working capital and capital expenditure costs, according to sources. The French government obligated Liberty to refinance operations by the end of May with an additional Eur20 million, or put the two companies up for sale if it could not get the refinance, sources have said previously.

Sale or refinancing

Liberty told Platts that it remained confident it could secure new financing, but it was also exploring sale options. Liberty also declined to comment on any steelmakers interested in the assets.

"Liberty Steel France, which incorporates Liberty Ascoval and Liberty Rail Hayange, has faced a significant reduction in working capital support since the collapse of Greensill Capital. Given the strength of the steel market and the high quality products we produce, we remain confident that we can secure new financing," a Liberty Steel spokesman had said in a statement to Platts on May 17.

"At the same time, we are taking prudent steps to explore sale options for these businesses and will be inviting interested parties to submit offers. Through this process we will collaborate with stakeholders to evaluate options and identify the best possible solution for the businesses and their employees," the statement added.

Acciaierie Venete and Arcelor Mittal declined to comment when contacted by Platts, while Saarstahl, Beltrame and JSW did not reply.

Previous bids

Arcelor Mittal, JSW and Saarstahl have bid for Hayange in the past, but Liberty won the company as it put in an offer for both Hayange and Ascoval.

"Now Hayange and Ascoval are put up for sale together, so you can't bid only for one asset. There is a big difference from this bid and the last one, as now Ascoval produces blooms following the Eur17 million continuous cast investments, and its products have been approved for the French rails," one of the sources said.

Both companies continue to operate normally, with Ascoval producing 25,000 mt of steel a month, of which 80% goes to Hayange, sources said.

Hayange produces between 250,000-300,000 mt of rails a year, most of them for France's state-owned railway company, SNCF.

Hayange and Ascoval are attractive because the rail market is not cyclical and could be a good investment for business diversification, as well as for synergies. Also, there is potential for economic recovery funds from the European Commission for the rail business.