Trade union Community and UK politicians have lambasted the "irresponsible" ownership of UK firm Liberty Steel, with the company's Speciality Steels unit facing a winding up petition tomorrow.
"New, responsible ownership is needed to give the business the brighter future it needs and deserves, and that can only be achieved with a decisive change at the top. Enough is enough — Sanjeev Gupta must invest in the business or step aside," Community Union general secretary Roy Rickhuss said.
"Our Stocksbridge Speciality Steels site needs new, competent ownership to maximise its potential, so that the business has a real chance for success," Labour Member of Parliament for Penistone and Stocksbridge Marie Tidball said.
The business, which has operated at a fraction of its nameplate capacity in recent years, is subject to a winding up petition submitted by major creditor Harsco and supported by a number of other creditors. The petition hearing had been delayed, but the company recently withdrew its own restructuring plan as it was clear it had insufficient creditor support to be approved.
Liberty had been in talks with the government, with some suggesting it was seeking investment to keep the business afloat, or a sale.
"We continue to closely monitor developments around Liberty Steel, including any public hearings, which are of course a matter for the company", a spokesperson for the Department for Business and Trade said. "It is ultimately for Liberty to manage commercial decisions on the future of its companies, and we hope it succeeds with its plans to continue on a sustainable basis."
Company sources suggested the winding up petition will go ahead tomorrow, with the official receiver likely to be appointed shortly after. But Liberty is seeking an adjournment to buy time, the sources said.
The government's intervention in British Steel, whereby it passed a law enabling it to direct the company, has prompted some talk that it could do the same with Liberty's Speciality business. Speciality produces high-grades supplied into strategic sectors, such as aerospace, and has the benefit of already being electric arc furnace-based. Its problems in recent years have been driven more by cash constraints rather than market conditions, given the higher-value of some of its product lines. But rising costs and tough trading conditions have clearly been a factor as well.
Some market participants said the government could look to connect some of the Speciality plants and British Steel to attract private investment. But others suggested the Speciality business may be more attractive to private investors as a stand-alone unit, and that there will be interest should it fall into administration.
Liberty said the UK sector has "for many years faced major challenges due to high energy costs and an over reliance on cheap imports". It also said it continues to hold discussions with creditors on restructuring the unit's debt, and is "grateful for the patience and fortitude" of colleagues and stakeholders.
