Liberty Steel to sell Stocksbridge plant to pay off lender

The UK's third largest steel maker, Liberty Steel, has announced plans to sell off its Stocksbridge steel plant as part of a restructuring plan.

It says the move will allow it to pay back one of its main creditors in full.

The announcement comes after a meeting over the weekend in Dubai between Liberty boss Sanjeev Gupta and representatives of Credit Suisse.

The investment bank lost more than £1bn when Mr Gupta's main financial backer Greensill Capital went bust in March.

Mr Gupta is now struggling to finance his UK operations, and 5,000 steel jobs at Liberty hang in the balance.

His global steel business, GFG Alliance, is also under investigation by the UK's Serious Fraud Office.

Credit Suisse have agreed to pause their court proceedings against Mr Gupta's empire while the sale of Stocksbridge is conducted.

The sale will also include Stocksbridge's downstream plants, which include the narrow strip mill at Brinsworth, and Performance Steels at West Bromwich which will be launched shortly.

The aerospace industry is a major customer of the Stocksbridge plant and the acute distress in that industry has seen demand for steel made at Stocksbridge plummet.

Sources close to Liberty Steel conceded that it was not clear what, if any, value would be realised in a sale.

They also said they were looking at other options apart from an outright sale including joint ventures with third parties.

However, offloading Stocksbridge would reduce the demands on the capital of the overall group and might therefore be attractive to creditors like Credit Suisse.

The move would allow Liberty to focus on its Rotherham plant which recycles scrap steel into new.

Sources close to Credit Suisse described the developments as "inching towards a solution".

However, Liberty Steel insiders conceded that the launching of investigations into the relationship between Liberty and its now-defunct backer, Greensill, by both the Serious Fraud Office and the Financial Conduct Authority were complications in refinancing the UK's third largest steel maker.

A spokesperson for the National Trade Union Steel Coordinating Committee, said: "Stocksbridge and its downstream plants are strategically important businesses vital to our country's defence, energy and aerospace sectors.

"The future for these businesses must be secured and the trade unions will hold Sanjeev Gupta to his promise that none of our steel plants will close on his watch.

"Liberty must act as a responsible seller and run a transparent sales process which fully engages the trade unions. We will expect to meet any potential buyer to scrutinise their plans and test their commitment to the workforce and our industry."

The Labour Party said the government should ensure Stocksbridge remained open, arguing the government should have a "plan B" in case the sale failed to secure the plant's future.

"Public ownership must remain an option on the table," said shadow business secretary Ed Miliband.

Labour metro mayor for the Sheffield City Region Dan Jarvis said the government should be "prepared to help provide finance to bridge any transition period until a new buyer is found".

In a series of comments on social media, business secretary Kwasi Kwarteng wrote that he was "monitoring developments closely".

"There is a future for steel-making in the UK, and I remain committed to supporting the sector's low-carbon transition to protect high-quality jobs," he wrote on Twitter.

"I'll be meeting the company, trade unions and local MPs over the coming days."