Liberty Steel secures creditor protection for Ostrava

Beleaguered Czech steel producer Liberty Ostrava has secured a moratorium against its energy supplier Tameh Czech.

The company applied for the moratorium in the regional court in Ostrava under Czech preventive restructuring rules, which enable troubled companies to restructure outside of formal insolvency proceedings.

The ruling "will allow the business to finalise and execute its restructuring plan, which will involve the restart of the blast furnace No.3 and the ramping up of the steel works", a company spokesperson told Argus. "This step aims to allow the business to negotiate terms on securing energy at normal market rates".

Ostrava took its only operational blast furnace off line in October with weaker demand and it has remained shut since. The company's other European blast furnace in Romania's Galati is also off line. Galati applied to Eximbank Romania for "working capital support" under the country's Framework State Aid Scheme Ukraine.

Ostrava has been in talks with Tameh Czech about what it owes. Tameh representatives walked out of the last meeting, according to sources close to parent Liberty Steel. European steel producer ArcelorMittal, which is seeking payment of a €140mn arbitration award from Liberty Steel, owns 50pc of the energy supplier.

Part of Liberty Steel's restructuring plan included the entrance of a strategic partner and the sale of part of its properties. It has 30 days to submit the plan. Liberty is also looking to offload assets in other countries as it looks to ease its working capital issues.

By Colin Richardson