Czech's Industry Minister urges Liberty Ostrava's owners, linked to commodities tycoon Sanjeev Gupta, to refund funds borrowed by related parties. The steel giant faces collapse with an energy supplier declaring insolvency over payment defaults. The state weighs options, hinting at potential insolvency action, contingent on restructuring adjustments and owners' commitment to infusing funds, reports Reuters.
In a bid to salvage Liberty Ostrava from a precarious brink, Czech Republic's Industry Minister, Jozef Sikela, has implored the owners associated with commodities magnate Sanjeev Gupta to return funds previously lent to connected entities of the steelmaker.
Liberty Ostrava, boasting an annual steel capacity of 3.6 million metric tons and a workforce of approximately 6,000, teeters on the verge of collapse after its energy supplier plunged into insolvency due to missed payments from the steel conglomerate. The resultant imminent energy cut-off has forced Liberty into a production standstill, compelling the closure of furnaces amid a distressing downturn in the European steel market.
Following discussions with Liberty Ostrava representatives, Minister Sikela outlined the state's potential recourse, including the consideration of insolvency proceedings. The course of action, he hinted, pivots on modifications to a proposed restructuring plan and the willingness of Liberty's owners to reintegrate finances into the company.
Revealing staggering debts, Sikela disclosed that related companies owed Liberty a substantial 7 billion crowns ($313 million), while the steel conglomerate owed the state 1.5 billion crowns.
During a live televised briefing, Sikela stressed the critical need for a firm commitment from the conglomerate, emphasizing a substantial inflow of funds back into the company starting from January and the subsequent months. He relayed Liberty's assurance of a reversible production shutdown and the continuous payment of salaries to its workforce.
The plea from Czech Republic's Industry Minister underscores the grave situation faced by Liberty Ostrava, urging the return of borrowed funds by entities connected to the steelmaker. As the company stands on the precipice of collapse amid energy supply insolvency, the minister hints at potential insolvency measures contingent upon restructuring adjustments and the substantial commitment of funds by Liberty's owners.