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Liberty Steel plans to sell its aerospace and steel business in Yorkshire as part of a deal aimed at ensuring its survival.
The UK’s third-largest steel company, owned by Sanjeev Gupta, announced on Monday it is in talks with Credit Suisse, one of its largest creditors, over a restructuring. Any funds raised from the sale of its aerospace and special alloys business in Stocksbridge, South Yorkshire, will pay off Credit Suisse.
As part of the proposals, the troubled group plans to offload a site in Coventry and a subsidiary, Liberty Aluminium Technologies, which has sites in Essex and Kidderminster.
It will also seek a buyer for manufacturing facilities in Brinsworth, South Yorkshire, and in West Bromwich. In total, the plants up for sale employ around 1,500 people.
It is hoped that a deal with Credit Suisse will help to secure the future of Liberty’s 5,000 UK workers whose jobs have been in doubt since the collapse of Greensill Capital, another of the company’s creditors.
Greensill, which is now the subject of a Serious Fraud Office investigation, had $5bn (£3.5bn) of exposure to Liberty’s parent company GFG Alliance.
Credit Suisse, in turn, was one of Greensill’s biggest backers and lost around $1bn when the firm went into administration in March. Since then, the Swiss bank has been pursuing Mr Gupta’s GFG Alliance to try to recoup some of its losses.
Liberty said it was in “advance discussions” over an agreement that would see Credit Suisse pause and recovery efforts.
Labour said the government should step in, and that public ownership of the company should still be considered.
The shadow business secretary, Ed Miliband, said: “It’s absolutely vital the government and Liberty secure legal assurances that the Stocksbridge plant, which is a British asset supplying our aerospace and defence industries and providing good jobs, will remain open and the workforce will be protected.
“Crucially, we also need assurances about all of Liberty’s other plants.
“The government must show it has a plan B to protect the long-term future of our steel industry, including at Liberty – and public ownership must remain an option on the table.”
Liberty believes that selling its Stockbridge business will allow it to focus on scaling up efforts to produce “green” steel at a plant in Rotherham.
“The plant will make use of some of the millions of tons of steel scrap currently exported by the UK to make more of the quality steel needed in the UK, which is currently being imported,” Liberty said.
A spokesperson for the National Trade Union Steel Co-ordinating Committee said: “Stocksbridge and its downstream plants are strategically important businesses vital to our country's defence, energy and aerospace sectors.
“The future for these businesses must be secured and the trade unions will hold Sanjeev Gupta to his promise that none of our steel plants will close on his watch.
“Liberty must act as a responsible seller and run a transparent sales process which fully engages the trade unions. We will expect to meet any potential buyer to scrutinise their plans and test their commitment to the workforce and our industry.”