Officials in the United Kingdom are working on plans in case they need to bail out Liberty Steel from collapse. There is fear of risk to a “critically important industry” and that thousands will lose their jobs, Bloomberg reported.
“Intensive discussion” are being held by the company, Business Secretary Kwasi Kwarteng and other senior officials, to “secure the future” of the company, sources told the publication.
Moneycontrol could not independently verify the report.
Among the plans being discussed include the government running the steelmaker with state funds till such time a potential buyer is brought in, sources added.
Meanwhile, nothing has been made public so far and Liberty Steel remains solvent. The company is part of owner Sanjay Gupta’s GFC Alliance which employees around 5,500 across 30 sites in the UK – of which close to 3,000 work at Liberty.
The discussions around Liberty came up after Gupta’s GFC Alliance’s biggest lender Greensill Capital went bust.
A government spokesperson told Bloomberg, they are “closely monitoring developments” around Liberty Steel and “continue to engage closely with the company, the broader UK steel industry and trade unions."
They added that the impact of the COVID-19 pandemic on steel producers and the UK economy on the whole was “significant” and is “recognised”.
“Our unprecedented package of support is available to the sector to protect jobs and ensure that producers have the right support during this challenging time,” the spokesperson added.
GFC did not respond to queries, the report said.
Kwarteng recently said the government may be prepared to intervene, but “any form of support” cannot be guaranteed. Ministers however feel that state funds may be needed to secure a company that is “strategically important for Boris Johnson’s government.”
There is also precedence, as the government stepped in with 600 million pounds for British Steel in 2019.