Two investors are reportedly interested in
taking over Liberty Ostrava, the largest Czech steel mill, which entered
insolvency proceedings last week.
Czech Minister of Labour and Social Affairs Marian
Jurecka said he know of two "very seriously interested”
investors, adding that “it cannot be ruled out that next week or the week
after another will appear”.
Online news outlet Seznam
Zpravy (SZ), reported earlier
that defence and heavy industry conglomerate Czechoslovak Group (CSG),
financial group Creditas and and local regional metals company Trinecke
zelezarny are among the potential investors into Liberty Ostrava.
The steelworks, owned by struggling
British-based Liberty Steel, part of industrialist
Sanjeev Gupta’s GFG Alliance, has shuttered most of its production since the
end of last year when its key energy provider Tameh Czech
stopped supplies to the plant over missing payments.
Employees have been on paid leave since then and the
company management pursued a reorganisation plan which was backed by the
majority of creditors under a court moratorium protecting Liberty Ostrava
against creditors.
However, without any warning, last Friday Liberty
Ostrava appeared in the insolvency registry, with stated liabilities exceeding
CZK5bn.
Liberty Steel later said that, "given
the ongoing material risks and uncertainties facing Ostrava, Liberty has
decided the right course of action is to initiate a sale of Ostrava’s operations
and withdraw the preventative restructuring plan in order to enter into a
judicial reorganisation under the Insolvency Act".
The company said the reorganisation would
"provide the time and protection to undertake the sales process and
further restructuring measures to stem losses".
The company blamed market conditions – namely global oversupply
and historically high imports into Europe from countries which face much lower
regulatory and decarbonisation costs. Soaring energy and coal prices and
falling steel demand and prices following Russia’s invasion of Ukraine have
hurt a sector already struggling to adapt to European Union environmental
rules that reduced competitiveness compared to Asian rivals.
It also pointed to the Czech goverment's failure to transfer
emission permits to Liberty Ostrava. Relations between the British-based group
and the Czech government have all but broken down, with Czech ministers
accusing the indebted group of failing to communicate and of moving money out
of the company to other operations.
The government has refused to run to the aid of Liberty Ostrava
and now appears determined to transfer its operations to a domestic investor.
SZ’s commentator Petr Holub and editor-on-chief of Reporter magazine,
Petr Holub, have pointed out that
for a potential takeover, the insolvency court would first have to turn
down Liberty Steel's proposed reorganisation, which could take
“weeks or months”.
Jurecka made his comments after a meeting with Liberty
Ostrava’s labour unions and representatives of the labour office on Tuesday,
June 18, where state aid to Liberty Ostrava’s employees was discussed.
“If the plant is to re-start again then we need to keep the people, and
not have them quit en masse,” Jurecka told the media.