Belgian court orders liquidation of Liberty Steel Liège, rejects restructuring plans

Liege Commercial Court in Belgium has rejected steelmaker Liberty Steel’s restructuring plans for its Liege subsidiary and ruled April 13 that it should be liquidated.

The court ruled against the restructuring April 13, siding with workers unions and the Walloon regionl government’s investment arm Sogepa, which no longer wanted the two Belgian steel plants, Tilleur and Flemalle, in the hands of Liberty.

In September, it was reported that Liberty had been in negotiations with the Walloon government for Sogepa to take a 49% stake in Liberty Liege and put up a loan for the plants to continue operations.

A GFG Alliance spokesperson told S&P Global Commodity Insights that the company planned to appeal the court’s decision.

“We are very disappointed that the Commercial Court has decided to ignore our legal arguments and our detailed presentation on the progress Liberty Liège has made on its transformation plan, which included the restart of the packaging line in Tilleur last month, as well as Liberty’s commitment to deliver the investment required to cover our outstanding requirements,” the spokesperson said in an emailed statement to S&P Global.

“We continue to believe our transformation plan would have provided the business with a long-term, sustainable future and preserved 650 jobs,” the spokesperson said.

The transformation plan included the tinning line at Tilleur, developing a new business model to build partnerships with major customers to manufacture specialist packaging for products, as well as using the G5 galvanization line at Flémalle to generate short-term profits.

The Tilleur packing line reopened on Feb. 14, 2022, but the Flemalle steel galvanizing lines have been at a standstill since December due to a lack of feedstock and the ongoing restructuring process.

Transformation plan

The transformation plan and restructuring process were presented to the Liege Enterprise Court on March 30, when Liberty management also explained it had been made much more complex due to rising energy and carbon prices, supply shortages due recent geopolitical developments and excessive competition from imports into Europe.

GFG Alliance, which groups together Liberty Steel Group and other metals and energy assets owned by magnate Sanjeev Gupta, acquired Liberty Liege in July 2019 from ArcelorMittal and has provided more than Eur80 million ($86.6 million) in funding since, including Eur28 million since December 2021.

However, the company said its long-term investment plans for the plants had been “undermined by the poor steel market in 2019 before the business was adversely impacted by the pandemic and supply chain disruptions.”

GFG’s main financier Greensill Capital also collapsed in March 2021.

“These issues, while being managed effectively even while the plant underwent a significant restructuring process, have been exacerbated over the last few months due to the huge rise in energy and carbon prices,” the spokesperson said.

Local Belgian media reported that the ruling was welcomed by workers unions and ended months of uncertainty. Three liquidators had already been appointed, the reports said.

The GFG spokesperson said Liberty would be working with the administrators to identify the next steps for the business and its employees.

If liquidation does go ahead, it could take several months or longer, depending on interest from potential buyers for the company and/or its assets, as well as available financing.

The spokesperson said Liberty was continuing to engage with other possible raw material suppliers and partners to restart Liberty Liège’s sister plant at Dudelange in Luxembourg.

Liberty merged its Liege, Dudelange in Luxembourg and Magona steel works in Italy into its larger Galati integrated steel operation in Romania in June 2021 as part of a broader group restructuring.

Dudelange and Liege together have production capacities estimated at 1.6 million mt/year of galvanized/coated steel, 300,000 mt/year of cold-rolled coil and 200,000 mt/year of tinplate.

The Platts North European hot-dip galvanized coil domestic ex-works price was assessed at Eur1,520/mt April 6, down from its recent high of Eur1,550/mt reached March 23, but up from Eur1,100/mt at the start of 2022.

— Jacqueline Holman