Liberty Steel tries to reassure customers over finances

Liberty Steel Group's businesses are "stronger" than in the past and demonstrating "solid cash flows, improving assets and consistent margin growth", chief marketing officer VB Garg said in a letter sent to reassure customers.

Garg said the company, part of global group GFG Alliance, is looking to broaden its capital base and secure longer-term funding but has been doing this for some months.

"GFG Alliance has adequate funding for its current needs, and its refinancing plans to broaden its capital base and obtain longer-term funding are progressing well," he said, adding that the company was benefitting from strong steel and aluminium markets.

The company has been the source of much scrutiny since one of its primary lenders, Greensill Capital, experienced financial difficulties recently. Some suppliers to the group's European and UK operations told Argus they would sell only on a cash-upfront basis in the absence of credit insurance. Some suppliers to its UK plants have policies scheduled to expire this month.

Liberty borrowed more than $1.7bn from Greensill as of December 2019, according to internal company documents obtained by Argus.

Some customers have lost patience with Liberty after it reneged on hot-dip galvanised deals from Liege and Dudelange that were done last year, while others agreed to renegotiate prices with the company. Some buyers are still waiting for material that should have been delivered in May 2020, they told Argus, while sources at the mills suggest they are continuing to suffer from a lack of substrate.

By Colin Richardson