The UK arm of Sanjeev Gupta’s steel empire has struck a preliminary deal with major creditors that could let it stave off insolvency proceedings by restructuring its debts.
Liberty Steel Group has reached a preliminary agreement with Credit Suisse Asset Management, Greensill Capital, and Greensill Bank to restructure its debts, the steelmaker said in a statement.
If finalised, the agreement in principle would see Liberty’s creditors adjourn their petitions to wind up Gupta’s embattled steelmaking firm.
“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,” the steelmaker’s chief transformation officer, Jeffrey Kabel, said.
Gupta’s GFG Alliance – which was once praised as the savior of Britain’s steel industry – was plunged into financial difficulties following the collapse of its largest creditor, Greensill, on whose money it heavily relied.
Liberty’s preliminary deal with creditors comes as the latest in series of agreements struck by the British steel maker’s owner, GFG Alliance, to fend off bankruptcy across the conglomerate.
Most recently, Liberty signed a standstill agreement with Greensill Bank in June to give it more time to refinance its debts.
The steelmaker’s refinancing efforts have however been made harder by an investigation into the firm, launched by French and British authorities, that saw the UK’s Serious Fraud Office (SFO) seize documents from the company’s buildings in April.
Industry sources speaking to the Financial Times said the deal could see Liberty’s creditors recover up to 55 per cent of their debts, with the expectation that any sums would be significantly less.
Credit Suisse is owed $1.2bn by GFG Alliance while companies linked to Greensill are owed $5bn by Gupta’s global metals empire.
Credit Suisse declined to comment. Greensill’s representatives were approached by City A.M. for comment.