Metals Tycoon Sanjeev Gupta’s Plan to Save British Steel Businesses

The metals tycoon Sanjeev Gupta is planning a controversial deal to save his remaining British steel businesses and avert their collapse into obligatory liquidation, which would endanger almost 1,500 jobs.

Background

Sanjeev Gupta has been in discussions about a so-called pre-pack administration by Liberty Steel’s Specialty Steel UK (SSUK), in which the assets may be sold to him. The Begbies Traynor auditing company is assumed to be advancing the pre-pack deal.

Potential Collapse of SSUK

Whitehall sources said that government officials had placed plans for the collapse of SSUK if a petition to be heard next Wednesday was approved. In this case, SSUK would probably enter an obligatory liquidation within days, with a special manager commissioning the operations by the official recipient.

Operations and Workforce

The British business of Mr. Gupta operates steelworks in Sheffield and Rotherham in South Yorkshire with a combined workforce of more than 1,400 people. SSUK is the UK’s third-largest steel producer.

Further Developments

Sources near Mr. Gupta said that he may receive a further adjoining petition to buy additional breathing space from creditors. In May, a hearing was postponed after lawyers acting for SSUK said that talks had taken place with "a third-party buyer".

Creditors and Investors

A pre-pack deal consists of the creditors of Liberty Steel, including HM Revenue and Customs. UBS, the investment bank, is also a creditor of the company. Grant Thornton, the auditing company, is processing the administration of Greensill, which has a significant interest in the legal procedure.

Investigation and Support

The Serious Fraud Office started an investigation into the GFG Alliance in 2022. On Saturday, a spokesman for Liberty Steel said: "The discussions have not yet been completed to complete the options for SSUK. We are still obliged to identify a solution that preserves the steel production of the current arch stove in Great Britain."

Government Involvement

The Department for Business and Trade was contacted for a comment. It was previously said: "We continue to monitor developments in Liberty Steel, including the public hearings that are a matter for the company. It is for Liberty to manage commercial decisions about the future of its companies and we hope that it will make its plans for a sustainable basis."

Current Status

The derived petition on Wednesday was submitted by the Harsco Metals Group, a supplier of materials and workers to SSUK, and is to be supported by other commercial creditors. The government has not yet made a decision to formally nationalize the British steel, although this is expected in autumn.

Financial Stress

Other parts of Mr. Gupta’s empire have been showing signs of financial stress for years. In May, the Financial Times reported that he was preparing to commission the administrators to monitor the bankruptcy of Liberty. Regardless of this, the HMRC submitted an inviting petition against Liberty Pipes at the beginning of this month, another subsidiary.

Production and Challenges

SSUK, which also operates from a location in Bolton, Lancashire, produces highly developed steel products for use in sectors such as aerospace, automotive additive, and oil and gas. The company announced at the beginning of this year that it had invested almost £200 million in the British steel industry in the past five years, but "considerable challenges due to the increasing energy costs and excessive dependence on cheap imports, which has a negative impact on the performance of all British steel companies".