Czech steelmaker Liberty Steel Ostrava has been awarded court protection against action from one of its main creditors while it seeks to restructure, a spokesperson for the company said Nov. 30.
“Liberty Ostrava can confirm that a specific creditor moratorium against its main energy supplier was granted yesterday morning. This will allow the business to finalize and execute its restructuring plan, which will involve the restart of blast furnace number three and the ramping up of the steelworks which aims to ensure the business is positioned for long-term success for the benefit of its employees, creditors, and stakeholders,” the spokesperson said, without giving further details. “The moratorium will allow the steelmaker to negotiate more favorable power prices and does not affect the day to day running of the company,” the spokesperson said.
Liberty Steel Ostrava is part of the multinational GFG Alliance.
As part of the moratorium procedures at the Ostrava court, Liberty Steel Ostrava had to prove it is solvent and that the overall business is viable and could be restructured without insolvency procedures, the spokesperson added.
Liberty Steel Ostrava previously announced that it had “hot idled” its only operating blast furnace from Oct. 23 due to a Europe-wide downturn in demand. The furnace was originally expected to re-start after two weeks but the spokesperson announced in a Nov. 15 email that its resumption would depend on finalizing a “sustainable operating model for the [Liberty Steel Ostrava] business.”
The main union at Liberty Steel Ostravo, Kovo, warned Oct. 17 that the steelmaker’s management and owner want to operate the furnace in a “stop start mode” responding to demand. When uneconomic, the blast furnace could be idled with steel products bought in from outside for further processing at the rolling mills and other facilities, it added. The union said such a strategy made little sense for an integrated steelmaker also operating a coke plant, steel plant, rolling mill and Liberty Engineering Products Ostrava (Lepo) subsidiary.
Liberty Ostrava is the Czech Republic’s biggest steelmaker with annual production capacity of around 2.0 million mt. It produces rolled products, tubes, and flat products with main customers in the construction, engineering, and oil and gas sectors.
Author: Chris Johnstone