Tuesday, November 15, 2022

News: Liberty make major step in refinancing


Liberty Steel Group has signed a term sheet subject to contract on an agreement in principle for a debt restructuring linked to its principal lender, Greensill Capital.

The company, part of Sanjeev Gupta's GFG Alliance, employs hundreds of staff in South Yorkshire, including in Rotherham. Gupta completed a £100m deal to acquire the Speciality Steels division of Tata Steel UK in 2017.

With the collapse of Greensill, a specialist in invoice financing that operated with less regulation than the traditional banks, Liberty put in place a specialist committe to accelerate a restructuring and refinancing project which saw investment and focus on the electric arc furnace at Aldwarke in Rotherham.

In June, courts ruled that financial firms Citibank and Credit Suisse could continue with their winding up petition against the speciality steels division of Liberty Steel. Issued to the courts by those seeking to recover money that they are owed, the move came ater HM Revenue & Customs (HMRC) issued a petition to have the speciality steel company wound up but following positive discussions, the petitions were withdrawn.

The latest agreement is for a debt restructuring with parties responsible for the main creditors of Greensill Capital (UK) Limited, Greensill Bank AG and Credit Suisse Asset Management (Switzerland) Limited, a major step in the Group’s refinancing.

Liberty and Greensill Bank as main creditors are in the process of negotiating a similar term sheet for the debt restructuring of Liberty’s European steel businesses.

Court documents showed that just the Rotherham-based speciality steels division, with its forecast turnover for the year to March 2021 of £267m, owed Citibank and Credit Suisse £46.8m. Other parts of the alliance owed £19.9m and $131m.

In a statement, Liberty said: "The agreement remains subject to documentation and the respective internal approvals. All parties will now work to prepare and execute the agreement, providing Liberty with the platform to develop longer term sustainable financing. Under the agreement, the parties have adjourned the winding up petitions against Liberty entities.

"The agreement will allow Liberty to further advance its GREENSTEEL strategy and industry leading ambition to become carbon neutral by 2030."

Jeffrey Kabel, Chief Transformation Officer at Liberty Steel Group, said: “After several months of negotiations, we have now reached an agreement in principle that will provide recovery for the creditors and will significantly deleverage and derisk Liberty. 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.”

Liberty Steel website

Images: Liberty


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