In the midst of a financial scandal, Liberty Steel closes factories

Audio 03:46

The Liberty Steel corporate flag flies over a steel plant in Dalzell, Scotland.

April 2016. © REUTERS - Russell Cheyne

By: Aabla Jounaïdi Follow

8 mins

Liberty Steel, which brings together the steel activities of the British magnate Sanjeev Gupta, announces its restructuring.

A group plant and other infrastructure will be put up for sale in the United Kingdom.

It was the dreaded outcome after the difficulties encountered since the bankruptcy of the financial company Greensill, the one that financed it and by whom the scandal happened.

Publicity

Greensill, a British finance company of which family conglomerate GFG run by Sanjeev Gupta was a major client, went bankrupt in March, dragging GFG down.

From now on, GFG is also in the crosshairs of the

Serious Fraud Office

, the British equivalent of the financial prosecutor's office for suspicions of fraud and money laundering, in particular in relation to Greensill.

We can see the main effects today.

Since then, it has been impossible for Sanjeev Gupta to find creditors

A loan of 200 million pounds by the company White Oak Global Advisors, the same one which had helped it to bail out its operations in Australia not long ago, it was refused. “ 

As a regulated body, we cannot continue discussions with a company that is the subject of an investigation

”. This is what she replied a few days ago to Sanjeev Gupta.

Since then, for the conglomerate, it is the parade of creditors.

The Tata Steel group is claiming arrears of payments of 100 million pounds dating from 2017. Citigroup on behalf of Credit Suisse has taken justice in London to recover the money of its customers who have invested in debt securities issued by Greensill, the bankrupt financier.

There is therefore no more new money to run factories which nevertheless have everything to be profitable at the moment with steel and aluminum prices at the top.

Hence the resale of factories and infrastructure in the UK

In early May, Sanjeev Gupta appointed a team to restructure his group. The Credit Suisse management company sat at the same table last weekend to seal the fate of the Stockbridge plant. Its main clients are in the aerospace sector. “ 

Unique and high-quality assets

 ” but not “ 

strategic

 ” the group said in a statement. Two other factories in the north of England have seen their sale recorded. Credit Suisse, which seeks to recover 10 billion dollars lost, will be able to repay itself with future sales of two other English factories and thanks to a refinancing agreement via a site in Australia.

At high speed, Liberty Steel is also redefining development priorities.

In particular, it will increase the capacity of the Roterham steel recycling plant to make it one of the first of its kind in Europe.

For its part, the British government says it is attentive to the fate of employees of the Sanjeev Gupta group.

They are 5000 in the United Kingdom.

The government says it is " 

exploring all options

 " in order to preserve their jobs, but it is embarrassed by the underworld because it refuses to come to the aid of the conglomerate itself whose scandal has revealed a little more the opacity of the financial ramifications.

A vast debate is launched in the United Kingdom on the absence of financial controls which would have favored the headlong flight of Liberty Steel.

The " 

savior of British steel 

" as it is nicknamed there has taken over sites in recent years.

And now he is crying out for famine.

A bailout request of 170 million pounds was sharply refused last March, the executive fearing that the money would go to feed a distant subsidiary of the group.

But all the same, the government is standing by in case Liberty Steel should suffer the same fate as British Steel, a group that collapsed in 2019.

On the other side of the Channel, in France in particular, the dreaded consequences of the shock are already there

From March, we felt the wind of the ball.

For lack of cash, three foundries of the aluminum branch in insolvency had been shut down with their 850 employees, then in receivership.

Liberty Steel France is looking for a buyer for the Ascoval plant in the North and Liberty Rail in Moselle for lack of new money as well.

Less than a year after the takeover of the site, we are again preparing for the waltz of the buyers.

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