Liberty Steel reaches outline debt restructuring deal with creditors

Manufacturing giant Liberty Steel has taken a major step that could see the group being refinanced and restructuring debt.

The complex steel manufacturer, which has operations across the country including Rotherham, Stocksbridge, Scunthorpe, and West Bromwich, is looking to recover from a turbulent period that began with the collapse of its key lender Greensill Capital.

Owned by Sanjeev Gupta’s Gupta Family Group Alliance (GFG), the firm has reached an outline deal with creditors which The Financial Times say could see those owed recouping a maximum of 55% – however, the figure is expected to be significantly less. The deal would incorporate all major Greensill creditors; Credit Suisse Asset Management, Greensill Bank and Greensill Capital.

“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,” said Liberty Steel’s chief transformation officer Jeffrey Kabel.

“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 has been facing several winding-up petitions, but all parties have now adjourned them.

The group now aims to find a similar deal to restructure the debt for its European steel business.

In June Liberty Steel signed a Standstill Agreement with Greensill Bank, its largest creditor, on the debt facilities relating to its European steel businesses. Under the agreement, all enforcement actions are paused between the parties over the Greensill Bank debt facilities provided to Liberty in 2019.

The agreement was intended to enable Liberty to develop a longer-term sustainable financing structure. It was valid until 31 October 2022 with the possibility of an extension until the end of 2022.