The UK government is poised to take control of Speciality Steels UK (SSUK), the nation’s third-largest steelworks, in an effort to safeguard approximately 1,500 jobs. The move follows ongoing financial instability at the company, which is owned by Liberty Steel and utilizes scrap metal to produce steel. The future of SSUK is in jeopardy due to significant unpaid debts, prompting concerns that the business may be forced into liquidation.
SSUK is notable for housing the UK’s largest electric arc furnace, which is recognized for its energy efficiency and potential role in the industry’s transition toward sustainable practices. However, the company has struggled to procure the necessary scrap metal for steel production following the collapse of Liberty Steel’s principal lender, resulting in a mounting pile of unpaid debts.
A High Court hearing is scheduled to determine the fate of SSUK. Lawyers representing Sanjeev Gupta, the executive chairman of GFG Alliance—Liberty Steel’s parent company—have requested an extension to pursue an administration process aimed at selling the company, thereby avoiding government intervention. Conversely, lawyers for the creditors have submitted a letter indicating government readiness to take over if necessary. These creditors are seeking to compel the company into liquidation so that Liberty Steel’s assets can be sold to recoup debts amounting to hundreds of millions of pounds.
In light of these developments, Gupta’s efforts to secure new funding from Blackrock are reportedly ongoing. However, the judge involved has expressed doubts regarding the future operations of SSUK following any potential compulsory liquidation.
The government, while supportive of the steel industry, has demonstrated reluctance to directly aid Gupta, who has faced scrutiny since his main lender’s collapse in 2021. This situation presents the government with difficult choices: to either permit Gupta to maintain control at significant cost to lenders or intervene to assist creditors by taking on a loss-making operation. The government confirmed it is monitoring the situation closely and preparing to act if liquidation occurs.
Source: https://www.bbc.com/news/articles/cj0yd0829m4o?at_medium=RSS&at_campaign=rss