5,000 jobs at risk as government refuses £170m ‘last roll of the dice’ request
One of the country’s biggest steel producers is at risk after the government rejected its request to approve an emergency £170m bailout.
Liberty Steel, which has operations in Rotherham, Stocksbridge, Motherwell, Newport and Hartlepool is part of GFG Alliance the businesses headed by Sanjeev Gupta, who got the moniker the Saviour of Steel in 2017 when he purchased Liberty’s assets from Tata Steel. But recently the business was hit by the collapse of Greensill Capital, one of the UK’s largest speciality banks and a major lender to Liberty.
According to reports, Gupta had asked ministers for the bailout on Friday, to cover working capital and operating losses as the business seeks to secure its future and 5,000 jobs across the country – 3,000 jobs through Liberty Steel and a further 2,000 in GFG’s other divisions.
However, following the government’s decision not to provide the bailout, which a source close to the situation told Sky News was the “last roll of the dice” for the company, Gupta is understood to be looking to raise new loans against parts of GFG outside the UK and from a sale of goods. TheBusinessDesk.com also understands that interested parties are currently looking at options around Liberty Steel and a potential acquisition of assets.
This is the latest news in the Liberty saga and follows business secretary, Kawsi Kwarteng telling MPs on Thursday that the government was looking to put a package of support for the steel producer together. Although it has been suggested this package would likely come after an administration process amidst reports that the government has concerns about the “opaque” nature of the Saviour of Steel’s businesses.
A spokesperson for GFG did not comment on the request to government but said: “Discussions to secure alternative long-term funding continue to make good progress and while this takes place we have asked all of our businesses to manage cash carefully.
“We are grateful for customers and suppliers support in this work which comes alongside our aim to secure additional working capital facilities to support the business and our use of the furlough scheme to support employees.
“We will continue to work closely with the unions and our employees to identify the most effective ways of supporting the business and preserving jobs.”
If Liberty Steel collapsed it would be the latest challenge for an industry which has faced a rocky period in since it was privatised in the 1980s, and comes two years after British Steel went into compulsory liquidation before being purchased by Jingye Group.
The steel sector has seen employment and output falling as it struggles to compete with cut price competition from China and now employs 32,000 people, a tenth of the number employed during the sector’s heyday of the 70s.
A Government spokesperson said: “The government is closely monitoring developments around Liberty Steel and continues to engage closely with the company, the broader UK steel industry and trade unions.
“The government has supported the steel sector extensively, including providing over £500m in recent years to help with the costs of energy.
“Our unprecedented package of Covid support is still available to the sector to protect jobs and ensure that producers have the right support during this challenging time.”
