The UK tax authority has withdrawn petitions to close down four Liberty Steel companies, giving breathing space to the GFG Alliance metals empire presided over by Sanjeev Gupta.
Gupta’s group of metals companies, including steel, aluminium and energy plants, has been struggling for finance for a year since the collapse of its main lender, Greensill Capital. The companies are said to employ as many as 35,000 people around the world.
The UK winding-up petitions, revealed last month, threatened the jobs of 3,000 workers across five plants, mostly in the north of England, including relatively large mills that make speciality steel in Rotherham and Stocksbridge in South Yorkshire.
That threat appears to have receded with the HMRC deal, although GFG also announced that workers at Liberty Pressing Solutions in Coventry had been invited into consultations about a possible closure of the plant. The factory had 580 employees, according to its latest accounts, for 2019, but it is thought that there are now only about 200 workers who could be made redundant.
As well as the financial problems, GFG has a threat of criminal investigations from the UK’s Serious Fraud Office and French prosecutors hanging over it.
GFG said it had made a “further significant injection of shareholder capital” into Liberty Steel UK, but did not specify how much or which companies within the loose group of companies had been the recipients.
In a statement on Monday, GFG said: “Following positive discussions with HM Revenue and Customs, winding-up petitions have been withdrawn. In parallel, constructive discussions continue with existing creditors to repay liabilities and with new lenders over longer-term refinancing of the business.”
In a written statement, Gupta said: “With refinancing initiatives well under way and our businesses performing well, this will be a formative year for our organisation as we work through our transformation plan.
“As our restructuring and refinancing programmes continue to progress positively, we are also making operational improvements to further enhance the performance of our core businesses against a backdrop of robust demand for our products.”
Alun Davies, a national officer for Community, a steelworkers’ union, said the HMRC deal was “extremely welcome”. “This is the best route to protect jobs, and the deal will increase confidence that GFG is committed to Liberty Steel UK,” he said. “GFG must now make good on promises to refinance Liberty Steel and deliver the investments we need to secure a long-term sustainable future.”
Davies added that he wanted the UK government to step in to support the steel industry by providing subsidies on energy prices, which have risen enormously as the recovery from Covid-19 lockdowns pushes up demand and Russia’s invasion of Ukraine threatens gas and oil supplies.