Sanjeev Gupta has put two French steel plants up for sale after failing in an attempt to refinance the sites in the latest sign of the financial strains at his metals conglomerate, GFG Alliance.
GFG has hired the investment bank Rothschild to conduct a sale of the two plants in north-eastern France, Ascoval and Hayange, according to sources familiar with the situation.
Liberty Steel, GFG’s steel division, bought the Hayange mill last August after its previous operator British Steel collapsed into insolvency. Ascoval was formerly controlled by Greybull Capital, the private investment firm that owned the UK steelmaker, and was bought by Liberty at the same time.
Gupta’s business has been scrambling to find new sources of finance since its main lender, Greensill Capital, collapsed into administration in March.
This week he refinanced his steelworks and related assets in Australia after agreeing initial terms with White Oak Global Advisors, a US-based private finance group.
White Oak has also offered a £200m loan to GFG to provide much-needed working capital to its UK steel plants, which would allow them to restart production. A deal, however, would require agreement from creditors.
British Steel was finally rescued from bankruptcy last year by China’s Jingye Steel, but the French government bridled at a possible sale of the French assets to the Chinese. Hayange makes steel rails for railway lines and the Paris metro, and Ascoval operates an electric arc furnace for recycling scrap.
The French government in March provided a €20m loan to the two plants. It has said that it is willing to support the workers and sites hit by the troubles at GFG, but will not bail out shareholders. The loans were given under the condition that the company would be able to raise fresh financing. The formal sales process was begun at the end of April, according to one person familiar with the situation.
Liberty Steel said its French operations, including Ascoval and Hayange, have faced a “significant reduction in working capital support since the collapse of Greensill Capital”. It said that given the strength of the steel market it remained “confident” about securing “new financing” but confirmed that “we are taking prudent steps to explore sale options for these businesses and will be inviting interested parties to submit offers”.
Rothschild and the French finance ministry declined to comment.