Liberty Steel seeks financial lifeline from the government with 3,000 UK jobs at risk
Business Secretary Kwasi Kwarteng has held fresh crisis talks with Liberty Steel as worries mount over whether it will secure new financing.
The company has been on the brink since Greensill Capital, the biggest lender to Liberty owner Sanjeev Gupta, collapsed in early March.
This has left the fate of 5,000 jobs in the lurch including 3,000 at Liberty, the UK’s third-largest steel group.
Liberty, the UK’s third-largest steel group, has been on the brink since Greensill Capital, the biggest lender to Liberty owner Sanjeev Gupta (pictured), collapsed in early March
Gupta owns a sprawling set of companies worldwide that he collectively calls the GFG Alliance – which includes Liberty.
He is in talks to raise cash from new lenders to prop up GFG since Greensill went bust. But worries about its opaque structure are reportedly putting off lenders.
Concerns are growing that Liberty will run out of cash – forcing the Government to step in to save UK jobs and plans.
It has been a staggering fall from grace for the 49-year-old tycoon, who was dubbed the ‘saviour of UK steel’ after a spree that began in 2013 saw him buy plants in Rotherham, Stocksbridge, Newport and Hartlepool.
A Whitehall source said the Government has no idea when new funding for Liberty will be secured and that ministers have not given Gupta a hard deadline.
The source said: ‘Liberty says it is still trying to arrange financing. But it doesn’t feel imminent. It’s quite a complex situation so these things aren’t quick.
‘We’ve been hearing it will be soon for the past two months. We’re still hoping for the best, but planning for the worst.’
Gupta has said the UK is the worst-hit of all of the regions where Liberty operates because a key division makes parts for the aerospace industry, which has been badly hit by the pandemic.
The outcome for other parts of his empire has been mixed.
In Australia, GFG is in talks with Bain and Oaktree to plug some of its funding shortfall. In France, three aluminium plants went into bankruptcy last week and are being propped up by the French state.
Kwarteng has said all options are on the table to save Liberty’s workers and factories.
The Government could even nationalise the struggling steelmaker if it plunges further into crisis. Last month Kwarteng turned down a £170million request for a Government loan, saying that he had no idea where the money would be spent.
He said at the time: ‘We feel if we gave the money, there was no guarantee that that money would stay in the UK and would protect British jobs.’