The steel producer has 30 days to present a restructuring plan
Czech Republic’s Liberty Ostrava, a subsidiary of Britain’s Liberty Steel, has received a court order for protection from its creditor, energy supplier Tameh Czech, and is preparing a restructuring plan, Reuters reports.
“Liberty can confirm that an individual moratorium has been announced in relation to an energy supplier. This will allow the company to complete and implement in practice the preventive restructuring plan, part of which is the restart of blast furnace No. 3 and an increase in production,» the company reported.
Liberty added that the purpose of the moratorium is to negotiate new terms of energy supply.
Local electricity supplier Tameh is the largest single creditor of Liberty Ostrava. Its representative said the company welcomes the fact that Liberty has recognized its difficulties and taken steps to resolve them.
According to Argus Media, Liberty filed a motion for a moratorium with the regional court in Ostrava in accordance with Czech rules of preventive restructuring, which allow troubled companies to conduct it outside the formal bankruptcy procedure.
Tameh is 50% owned by steel company ArcelorMittal, which recently filed a motion to freeze Liberty’s accounts, demanding payment of a €140 million arbitration award. According to Czech media, the plant owes the supplier more than CZK 1 billion for energy.
Liberty Ostrava’s restructuring plan may include attracting a strategic partner and selling some of its property or emission quotas, and the company has 30 days to submit it. Liberty is also looking to offload assets in other countries to ease working capital problems.
The last operating furnace at Liberty Ostrava has been idle since October this year due to poor market conditions.
As GMK Center reported earlier, Liberty Galati, a Romanian steel plant that is part of the GFG Alliance group of companies owned by Sajiv Gupta, faced more than a dozen claims from local suppliers for unpaid invoices this fall. GFG noted that many of these small claims are disputable and unjustified, and a small number of issues that needed to be resolved are being addressed.
Also, Liberty Ostrava started the process of shutting down one of the three coke batteries at VKB No. 11 in late September 2023. According to the company, the unit was inefficient and was becoming increasingly unprofitable due to excess production capacity in the market. The shutdown process will take several months. All employees of the unit were offered jobs at other facilities of the plant.