Liberty Steel reaches standstill agreement with Greensill Bank

Announced yesterday (13 June), the agreement - valid until 31 October although this can be extended until the end of 2022 - will see all enforcement actions paused between the parties over the Greensill Bank debt facilities provided to Liberty in 2019. This, according to Liberty, will enable it to develop a “longer-term” sustainable financing structure. 

Commenting on the news, a Liberty Steel Group spokesperson said: “Today’s standstill agreement with Greensill Bank demonstrates we are getting close to a consensual debt restructuring that is in the best interests of all our stakeholders.

“We are working intensively towards a settlement with our major creditors in a timeframe which would obviate the need for a legal battle. Our core businesses continue to perform well and are operationally strong despite some economic headwinds.”

The news comes while Liberty has been in the middle of a major restructuring and refinancing process, alongside its parent company GFG Alliance. 

The group’s restructuring transformation committee was set up last May and saw it develop a strategy for the future of the business which will see it focus on its primary metal production hubs and associated downstream units, and renewable energy developments. 

This latest announcement from Liberty comes during a period of difficulty for the wider GFG Alliance business with it facing a winding-up petition which began last month (May) filed by Citigroup on behalf of one of its creditors, Credit Suisse. 

According to The Guardian, earlier this month the firm failed in an attempt to have the petition thrown out on the grounds its struggles were caused by the Covid pandemic. 

Its owner, Sanjeev Gupta, argued in a witness statement there was a “significant adverse financial effect” caused by the pandemic because of a slump in demand for steel in the automotive and aerospace industries. 

A GFG Alliance spokesperson told the outlet at the time: “This judgment on Covid protection qualification does not mean that the UK companies in question will be wound up. 

“Any further hearing would likely be in autumn or winter this year at which the merits of the winding-up proceedings will be heard in their own right. We will defend our position vigorously and we have evidenced our commitment to our UK businesses with injections of shareholder capital since October 2021.”