As part of a deal to ensure its sustainability, Liberty Steel wants to sell its aerospace and steel company in Yorkshire.
Sanjeev Gupta's Sanjeev Steel, the UK's third-largest steel firm, reported on Monday that it is in negotiations with Credit Suisse, one of its largest creditors, over a restructuring. Credit Suisse will be repaid with any funds received from the sale of its aerospace and special alloys company in Stocksbridge, South Yorkshire.
The distressed company wants to offload a site in Coventry as well as a subsidiary, Liberty Aluminium Technologies, which has locations in Essex and Kidderminster, as part of the proposals.
It will also look for a buyer for its factories in Brinsworth, South Yorkshire, and West Bromwich, West Midlands. Around 1,500 people are employed by the plants for sale.
An agreement with Credit Suisse is hoped to help safeguard the future of Liberty's 5,000 UK employees, whose jobs have been in jeopardy after Greensill Capital, another of the company's creditors, failed.
Greensill, which is now under investigation by the Serious Fraud Office, has a $5 billion (£3.5 billion) exposure to Liberty's parent business, GFG Alliance.
Credit Suisse, meanwhile, was one of Greensill's main investors and suffered a $1 billion loss when the company went bankrupt in March. Mr. Gupta's GFG Alliance has been pursued by the Swiss bank since then in an attempt to recoup some of its losses.
Liberty said it was in "advance talks" with Credit Suisse about pausing and resuming its recovery efforts.
According to Labour, the government should intervene, and public ownership of the business should be considered.
“It's absolutely crucial the government and Liberty secure legal guarantees that the Stocksbridge factory, which is a British asset supplying our aerospace and defense industries and providing good employment, will stay open and the workforce will be protected,” said Ed Miliband, the shadow business secretary.
“On top of that, we need guarantees about all of Liberty's other plants.
“The government must demonstrate that it has a backup plan to ensure the long-term viability of our steel industry, including Liberty – and public ownership must remain an option.”
Liberty believes that selling its Stockbridge company would enable it to concentrate on expanding efforts to produce "green" steel at a Rotherham factory.
“The plant will use some of the millions of tons of steel scrap that the UK currently exports to produce more of the high-quality steel that is currently imported,” Liberty said.
“Stocksbridge and its downstream plants are strategically important businesses crucial to our country's defense, oil, and aerospace sectors,” a spokesperson for the National Trade Union Steel Co-ordinating Committee said.
“These companies must have a future, and the trade unions will keep Sanjeev Gupta to his pledge that none of our steel plants will close under his watch.
“Liberty must serve as a responsible seller and conduct a transparent sales process in which trade unions are actively engaged. We will meet with every prospective buyer to examine their intentions and assess their commitment to our workforce and industry.”
