Liberty Ostrava has clarified its financial situation to creditors

Czech steelmaker Liberty Ostrava, a subsidiary of British Liberty Steel, has provided an explanation to its creditors about its financial position. Argus.Media reports this with reference to the company’s letter.

Between August 2022 and September 2023, Liberty Ostrava sold €359 million worth of carbon credits. During the same period, the company purchased €183 million worth of carbon credits, which indicates that it was buying them back after previous sales.

In July 2022-October 2023, Liberty’s operating profit before interest, taxation, depreciation and amortization was minus €236 million.

In a statement to creditors, the company noted that it had agreed to a temporary payment plan until February 29, 2024 with a secured creditor with a claim of more than €61 million. However, Liberty Ostrava is negotiating a longer-term plan, as well as negotiations with other creditors on payment plans or deferred payments.

«We would like to assure you that as part of the preemptive restructuring, the value of your receivables will not decrease and will be paid in full, but later than originally agreed or expected,» Ajay Aggarwal, chairman of Liberty’s board of directors, noted in the letter.

The restructuring plan also provides for a change in the contract with the energy supply company Tameh Czech. The latter recently filed for insolvency after Liberty failed to pay. Liberty Ostrava announced that it wanted to renegotiate the terms to purchase electricity at market prices rather than a fixed fee, as it had been previously. Liberty had intended to acquire Tameh as part of its 2019 asset purchase from ArcelorMittal, but the deal did not go through.

According to ČT24 TV channel, it depends on whether the plant manages to reach an agreement with the energy supplier and whether it will be able to start production. Liberty owes Tameh CZK 2 billion ($81.8 million).

As GMK Center reported earlier, the Czech government called on Liberty Ostrava to pay off the energy supplier. The steelmaker, in turn, is seeking to resolve issues with creditors and align them with market conditions. In particular, the company has unveiled a production optimization plan that envisages the launch of blast furnace No. 3 in January. In addition, the company will focus on producing the most popular products and importing some raw materials.