GFG Alliance issues update on restructuring and refinancing progress
- LIBERTY Steel USA secures US$125mn refinancing through Eclipse Business Capital
- New leadership structure to enhance governance and simplify operating model
- Strong commodity markets help to offset impact of high energy costs
LIBERTY Steel Group’s Restructuring and Transformation Committee (RTC) today reports on the continuing developments across the Group and the sustained progress achieved to date.
Jeffrey Stein, Chief Restructuring Officer, said: “The refinancing of our LIBERTY Steel USA business is further confirmation of rising confidence in our restructuring plan, our GREENSTEEL transformation strategy and the quality of our U.S. operations. The strength of our international asset base is supporting our efforts to stabilise, refocus and refinance our operations, which are gaining momentum.
At the same time, we are making significant progress in evolving our corporate governance structures, in line with our commitment to increase transparency and accountability. Our new structure will support more effective decision-making and robust systems and processes and position the group to thrive and generate quality jobs in the years to come.
We’re also taking the necessary steps to close or divest non-core businesses. Businesses that are not viable due to changed market conditions have either been sold or closed. However, for high potential but non-core businesses such as our super alloys speciality steel division in the UK, we are restructuring them to make them leaner and more competitive, and also looking for new owners or partners for such businesses who will be specialized and focused shareholders creating sustainable value and preserving high quality jobs.”
- LIBERTY Steel USA has successfully refinanced its US$125m Asset Based Loan (ABL) with Eclipse Business Capital, another significant step forward in GFG Alliance’s programme to refinance its international operations. The refinancing highlights the competitive advantage of LIBERTY Steel USA’s integrated steel model and strong position it holds in its core automotive, construction, agriculture and consumer markets.
LIBERTY’s model enables its upstream plant in Peoria, Illinois to run at higher capacity utilisation, and provide lower cost, efficient supply for its downstream operations. The success of this framework, and the market agility it creates, has laid the platform for LIBERTY to reinvest in its facilities so it can develop and leverage its best in class market brands such as Red Brand fencing.
- LIBERTY Steel Group has implemented a new organisational model to improve governance, accountability and decision making which includes delegated authority from the shareholder to regional presidents.
- GFG has appointed global steel industry executive Sandip Biswas as its Group Chief Investment Officer responsible for commercial performance, investment strategy and delivering the group’s carbon neutrality goals.
- LIBERTY Steel UK on April 8 launched a consultation with its employees and unions to restructure its super alloys speciality Steel division to enhance their productivity and competitiveness ahead of a possible sale or JV. This is anticipated to result in a net reduction of approximately 50 roles after factoring in new and vacant roles at its nearby GREENSTEEL operation in Rotherham fuelled by new investment and volume growth.
- The Group has set up a dedicated central team who are closely monitoring the situation in Ukraine to ensure our contingency plans remain effective. That team, working closely with local management, continues to focus on ensuring the resilience of our supply chain as well as working closely with our customers.
- The Commercial Court in Belgium on April 13 ruled that administrators should be appointed to LIBERTY Liege due to negative equity. GFG is disappointed by the ruling, as under international IFRS standards Liege does not have negative equity, and it is only by marking all fixed assets of the company to near zero under Belgian GAP that this technical provision of negative equity has been derived. Nonetheless GFG will implement immediate remedies in consultation with the administrators, including recapitalization of the balance sheet, and appeal to the Belgium courts to restore the business to normalcy. GFG continues to believe strongly in its transformation plans for Liege, which will provide the business with a long term, sustainable future preserving 650 quality jobs.
Leadership structure and Governance
Since the collapse of Greensill in March last year, GFG has been focused on two key strategies: to stabilise, refocus and refinance its operations; and to accelerate the evolution of its corporate structures and governance. The first strategy was kick-started with the creation of the RTC in May 2021 which has led to significant progress since then.
Today GFG can announce a significant step in the evolution of the structure and operating model of the group and LIBERTY Steel Group (LIBERTY). There will be a significant restructuring of LIBERTY’s management operation, which will allow GFG to move forward and mature as an organisation. This follows on from the appointment of Iain Hunter as Chief Governance Officer in May 2021 and the subsequent development of a new organisational structure for LSUK.
- LIBERTY today also announces a new management structure, which will see it simplify and formalise the organisation of its senior management team. The new structure will clarify roles and responsibilities, create simpler reporting lines, better enable value creation and protection, and provide more robust systems and processes.
- To enhance operational governance, LIBERTY has appointed regional Presidents who will have Delegation of Authority (DOA) to represent LIBERTY’s shareholder in their given countries or regions and to serve on local boards. The new Presidents are listed below, with further appointments to be made in due course:
- Ajay Aggarwal (currently GFG’s Executive Director for Central, Eastern & Southern Europe) – President, Europe
- Jeffrey Kabel (currently Chief Transformation Officer) – President, UK
- Dak Patel – President, Australia & US (current)
- Paul Francis – President, Middle East
- Mehmet Coruh – President, Turkey
- The Presidents will work alongside Group CEOs who will lead operations and performance across their regions and divisions. Group Functions (HR, Finance, IT etc.) will be centralised in Dubai Head Office and operate under a matrix reporting structure to ensure efficiency of resource and improve accountability.
- Strategic decision making will be reviewed and approved by a range of governance bodies which sit under the LIBERTY Steel Group Board. They include the Restructuring & Transformation Committee, the Presidents’ Forum, Audit & Risk Committee, and the Environmental, Social and Governance (ESG) Committee. Only Presidents, Group CEOs and select Functions will report to Sanjeev Gupta, Executive Chairman, reducing his direct reports and allowing him to focus on the Group’s strategic objectives.
- LIBERTY Bell Bay in Tasmania, one of the word’s greenest ferro alloy producers, was formally inaugurated this month. Following significant investment to repair and restart the smelter’s fourth arc furnace, the site is now performing very well with sales of its alloys improved by 18%. The continued operation of the site has secured the future of 250 high quality Tasmanian jobs.
- In a keynote address to the American Chamber of Commerce in Adelaide on 7th April, Sanjeev Gupta unveiled the first phase of the Whyalla plant’s magnetite expansion project, which will increase magnetite concentrate production to 2.5Mtpa, providing a key building block for Liberty’s GREENSTEEL transformation plans. The speech underlined the strategic importance of Australia in leading the global hydrogen revolution and the renewed importance of domestic manufacturing capability and sustainable supply chains.
- LIBERTY Galati, the largest integrated steel producer in Romania, has reported its strongest annual production levels since 2010, with its Blast Furnace No. 5 achieving 2.1 million tonnes of hot metal, the highest production level since its installation in 1978. The business reported a total production volume of 2.35 million tonnes in 2021, due to a range of operational and management efficiency improvements, and continues to increase its production level while transforming LIBERTY Galati into a low carbon GREENSTEEL producer.
- LIBERTY Częstochowa has made further progress in its ambition of becoming Poland’s only producer of carbon neutral GREENSTEEL plate with the installation of a 450 kilowatt solar farm on its site. The planning for a second solar farm, which once completed later in the year will provide the plant with around 3 MW of renewable energy capacity, is already underway.
In response to the progress achieved by the RTC, Sanjeev Gupta, Executive Chairman of GFG Alliance, commented:
“As GFG moves forward with its refinancing and transformation, including today’s announcement of a significant refinancing in the United States, the Group is putting in place the right leadership and governance structures to ensure its long-term strength and health. Our new evolved corporate structure will ensure sound and effective decision-making. It will also enable me to focus more on the strategic objectives of the group, particularly our financial restructuring and transformative CN30 ambition, while my senior management teams drive our operations forward to continued success.”
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