Liberty HDG lines offer discount for cash upfront

Liberty Steel's Liege-Dudelange hot-dip galvanising (HDG) lines in Belgium and Luxembourg are requesting that customers pay in advance in return for a discount, as the firm looks to generate cash to maintain production.

The company's primary hot-rolled coil supplier, ArcelorMittal, is requesting cash upfront for deliveries, given Liberty's financial problems since major lender Greensill Capital filed for insolvency protection this month.

Liege-Dudelange "is not at all connected to Greensill", Liberty said in a note to customers, but the bank's collapse has prevented the group from supporting the lines' cash needs. In fact, Greensill almost exclusively financed the acquisition of the Liege-Dudelange lines from ArcelorMittal.

Liberty's customer note, which admits the cash squeeze, follows another that claimed the company was in a strong position and benefiting from steel prices being at multi-year highs.

In one customer email, the company suggests that it can offer a 4pc/yr discount in return for advance payment.

Some customers have recently renegotiated prices with Liege-Dudelange after deliveries did not arrive and the mills threatened to cancel contracts. Others refused to run the risk of not receiving material and tried to buy elsewhere, although this has not been easy in the tight market.

By Colin Richardson