Liberty Liège-Dudelange, part of the Liberty Steel Group, has been granted temporary protection from creditors of its Belgian Liège plants and will work in coming days with stakeholders to identify new sources of financing to sustain the company’s activities and continuity, a Liberty Steel Group spokesperson said May 14.
Dudelange and Liège together have annual production capacities estimated at 1.6 million mt of galvanized/coated steel, 300,000 mt of cold-rolled coil and 200,000 mt of tinplate, products greatly sought after in recent months due to a tightness in the European markets which has been pushing prices up since Q3 2020.
The daily S&P Global Platts’ assessment for hot rolled coil, the base product for Liège-Dudelange’s products, rose Eur5/mt ($6.07/mt) May 14 to Eur1,095/mt EXW Ruhr, having risen Eur65/mt on week. Its current price is the highest-ever.
Granting of court protection follows Liberty Steel Group’s request on April 27 to the Liège Enterprise Court that it should grant a judicial reorganization procedure (PRJ) for its Liège plants, the group spokesperson said in an emailed statement to Platts.
Sources close to Liberty Steel Group said that this business had been adversely impacted by the coronavirus pandemic, with the situation exacerbated by the March collapse of Greensill Capital, the main financier of parent group GFG Alliance.
“LIBERTY Liège-Dudelange, which incorporates two plants at LIBERTY Liège in Belgium and LIBERTY Dudelange in Luxembourg, has faced a significant reduction in working capital support since the collapse of Greensill Capital which has led to ongoing issues with its main supplier of Hot Rolled Coil (HRC),” the Liberty Steel Group spokesperson’s statement said.
HRC supplies
The company sources alleged it had suffered “significant issues” with its main supplier of hot rolled coil, impacting its ability to operate at full capacity even after COVID-19 restrictions were lifted and causing supply chain disruptions.
However, steelmaker ArcelorMittal, the main supplier of hot rolled coil to Liège-Dudelange, said May 14 that it continues to supply to the works under a pre-established contract arrangement.
A “temporary issue” with one supplier had been resolved via a commercial dispute procedure a Liberty Steel Group spokesman said early March.
Market sources had nonetheless been cited as saying that Liberty Liège-Dudelange had secured pre-material via non-EU imports recently after customers refused to accept Liberty’s suggestion to supply their own coil for rolling at the works.
Former ArcelorMittal works
The operations at Liège-Dudelange were bought from ArcelorMittal in July 2019 in a Eur740 million deal. ArcelorMittal’s sale of various works – several of which were acquired by Liberty Steel Group – was part of an antitrust deal imposed by the European Union competition authorities to allow ArcelorMittal to take over Italy’s Ilva. For that reason ArcelorMittal would not now be able to buy back any of the works sold to Liberty, despite market chatter that this could be on the cards.
Liberty Steel Group said May 5 it will “fix or sell underperforming units” in a restructuring and refinancing drive as it recovers from the Greensill Capital collapse..
In the UK, sources said that some Liberty steel rolling mills are currently working only one day a week. A stockholder said Liberty is currently offering hot rolled coils in the market in UK for August rolling at GBP950/mt ($1,339/mt) on the condition they are paid for upfront.
PRJ to ensure continuity
The objective of the Liège-Dudelange PRJ, which applies only to the company’s plants at Flémalle and Tilleur in Belgium, is to temporarily protect the company from its creditors, while ensuring the best possible ongoing relationships with them, and ensure the continuity of the company, the Liberty Steel Group statement said.
It is understood that the PRJ will not affect the day-to-day management of the Liège business and the local management team will remain at the helm, benefiting from an initial creditor moratorium to the end of July 2021.
“In the next few days, the company’s management team and a Mediator will continue to work collaboratively with stakeholders to identify new sources of financing to sustain the company’s activities,” the spokesperson said. “LIBERTY will also continue to engage with stakeholders to identify new sources of financing of the Dudelange plant. LIBERTY Liège-Dudelange’s first priority remains the welfare of its high quality and highly committed employees and the management team believe that these decisions will offer the best chances for a sustainable outcome for the plants, their employees and their loyal customer base.”
News of the Liège-Dudelange creditor protection follows the late April entry into judicial administration of three French units of Alvance Aluminium, GFG Alliance’s aluminum subsidiary.
— Diana Kinch and Laura Varriale
