The largest Czech steel mill, Liberty Ostrava, a part of the UK-based Liberty Steel Group, has petitioned for creditor protection. With a 30-day window to propose restructuring, the move aims to evade bankruptcy. The plan includes market optimism in early 2024, anticipating a €200mn boost from an investor, property sales worth €10.3mn, and cessation of coke production.
Liberty Ostrava, the most significant steel mill in the Czech Republic and a wing of the UK's Liberty Steel Group, has taken a significant step by seeking protection from its creditors. In a bid to avoid bankruptcy, the mill has initiated a crucial 30-day timeline to present a restructuring blueprint.
The decision to seek this protection comes with the backing of all creditors, as reported by Czech business daily Hospodarske noviny (HN). Energy supplier Tameh, one of the major creditors, expressed readiness to cooperate fully to ensure the mill's operations and employment persist amid this restructuring phase.
Labor union representative Petr Slanina affirmed these developments, emphasizing the ongoing nature of the situation, lacking further details at present, as per Czech Press Agency (CTK) reports. The proposed restructuring blueprint of Liberty Ostrava hinges on optimistic forecasts for the steel market in the first quarter of 2024. An anticipated €200mn injection from a strategic investor is poised to support the company's resurgence.
Liberty Ostrava's restructuring vision encompasses real estate and land sales valued at €10.3mn and a strategic decision to halt coke production. However, the mill faces financial obligations, notably owing approximately €62mn to the Czech state insurer EGAP, a support extended during the COVID-19 pandemic. Reports suggest that creditors have consented to deferred payment schedules.
Despite recent operational adjustments like the shutdown of oven no. 3, the company maintains its commitment to retaining its workforce, as affirmed by company spokesperson Katerina Zajickova. Czech Minister of Industry and Trade Jozef Sikela reassured state support, emphasizing a resolve to address concerns surrounding the company and safeguard its employees.
Liberty Ostrava, an integral part of the steel industry with an annual production capacity of about 3.6 million metric tons, holds a substantial global supply network spanning over 40 countries. It operates under the Liberty Steel Group and the London-based GFG Alliance, both under the ownership of Sanjeev Gupta and family.
The step taken by Liberty Ostrava to seek creditor protection highlights the precarious financial situation faced by the significant Czech steel mill. The proposed restructuring plan, backed by all creditors, aims to navigate away from bankruptcy by leveraging market projections and strategic investments. This pivotal moment not only impacts the steel industry but also underscores the broader economic landscape, particularly in the Czech Republic.