Sanjeev Gupta faces a battle to retain control of his Belgian steel operations ahead of a court decision this week on their future ownership, as the under-fire industrialist attempts to prop up his GFG Alliance group.
A court in the Belgian city of Liège will on Tuesday rule on whether to take control of GFG’s two sites, at Flémalle and Tilleur, and put them up for sale following a request by a court-appointed judicial observer.
The observer, who was appointed in May to support the management of the two plants, made the request in light of their deteriorating economic conditions, a spokesperson for the Liège Commercial Court confirmed on Friday.
Granting of the request will, in effect, allow the sale of the assets of the company if it comes under the control of the court, the spokesperson added. The judicial observer declined to comment.
The hearing is the latest challenge facing Gupta, who has been battling to refinance GFG ever since the collapse of its main lender, Greensill Capital, in March last year, amid allegations of fraud. The UK’s Serious Fraud Office and French police are investigating GFG Alliance companies over suspected fraud and money laundering. GFG has consistently denied any wrongdoing.
Gupta last year lost control of a Belgian aluminium mill to private equity group American Industrial Partners. AIP had already taken over Europe’s largest aluminium smelter in Dunkirk, France, from the industrialist.
The two Belgian steel plants, which together employ about 650 people, operate under GFG’s steel arm, Liberty Steel Group. GFG acquired the sites and a facility in Dudelange, Luxembourg, from ArcelorMittal in 2018.
Gupta in May successfully appealed against a decision that called for the Belgian business to be liquidated after a judge rejected a restructuring plan.
The decision was overturned after Gupta’s Romanian steel subsidiary, Liberty Galati, provided financial support for its Belgian counterpart in the form of a debt-to-equity swap worth €52.5mn as well as €3mn in cash, according to court records filed at the time.
Since then, however, soaring energy prices in Europe in the wake of the war in Ukraine, coupled with falling customer demand, have severely affected the operations at the two plants.
Liberty Steel Group told the Financial Times that the request for the court in Liège to “open reorganisation proceedings aimed at a transfer of Liberty Liege’s business . . . runs counter to the significant efforts made” by the company in collaboration with the regional Walloon government to “identify a sustainable future” for the plants.
The company, it added, had continued to pay employees and other creditors while operations had been idled to minimise energy consumption and exposure to commodity prices.
Liberty “may consider appropriate legal action once the court has made its decision”, the company added.
