The British arm of Sanjeev Gupta’s steel empire has reached a preliminary agreement with major creditors that could allow it to avoid 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 finalized, the deal would in principle see Liberty’s creditors suspend their petitions to liquidate Gupta’s embattled steel company.
“After several months of negotiations, we have now reached an agreement in principle that will provide recovery for creditors and significantly reduce Liberty’s leverage and risk,” said the steelmaker’s director of transformation Jeffrey Kabel.
Gupta’s GFG Alliance, once hailed as the savior of the British steel industry, found itself in financial trouble after the collapse of its biggest creditor, Greensill, on whose money it heavily depended.
Liberty’s preliminary agreement with creditors is the latest in a series of deals struck by the British steelmaker’s owner, GFG Alliance, to avoid 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.
However, the steelmaker’s refinancing efforts have been hampered by an investigation into the company, launched by French and British authorities, in which the UK’s Serious Fraud Office (SFO) seized documents from the company’s buildings. company in April.
Industry sources who spoke to the Financial Times said the deal could see Liberty’s creditors recover up to 55 percent of their debts, with the expectation that any sum would be significantly less.
GFG Alliance owes Credit Suisse $1.2 billion, while Gupta’s global metals empire owes $5 billion to companies linked to Greensill.