Business Secretary Kwasi Kwarteng has told a parliamentary inquiry on Liberty Steel that he thinks the nationalisation of the firm is ‘unlikely to happen.’
He said the government was considering all options for the steel plants operated by the struggling GFG Alliance but stated that public ownership of the assets was the ‘least likely’ route.
Kwarteng told the House of Commons’ Business, Energy and Industrial Strategy Committee that the fact Liberty Steel was putting some plants up for sale was proof of their underlying strength.
On the table: Business Secretary Kwasi Kwarteng (above) said the government was considering all options for the steel plants operated by the struggling GFG Alliance
The Cabinet Minister said: ‘My own view is that the assets themselves are good assets. And that’s why after all, the American financiers are putting the assets up for sale. They wouldn’t be doing that if they didn’t think there were buyers in the market, and I think they are.’
He added: ‘I think nationalisation is unlikely to happen frankly. And my view has been vindicated by the fact that the assets are for sale. I think that there’s considerable interests in the assets.’
It comes a day after Liberty Steel announced it intended to sell seven sites across the UK, including its large aerospace and special alloys plant in Stocksbridge, South Yorkshire, to help refinance and restructure its operations.
Aside from venues in Yorkshire, Liberty is also pressing ahead with the sale of its West Midlands-based Pressing Solutions business and its Essex-based Aluminium Technologies division.
Liberty said the divestment would enable it to put greater focus on its Rotherham plant, with the intent of manufacturing 2 million tonnes of ‘green steel’ a year.
Asked by Alexander Stafford MP about the Rotherham operations, Kwarteng replied: ‘The workforce is skilled and dedicated. The managers of the plant are very experienced. I’ve spoken to them very frequently.’
For sale: Liberty Steel announced yesterday that it was pressing ahead with the sale of numerous plants, including its West Midlands-based Pressing Solutions business
The sale of some of the steel producer’s assets was prompted by a weekend of meetings between Credit Suisse and Liberty Steel’s parent company GFG Alliance, which is run by Indian-born business tycoon Sanjeev Gupta.
GFG Alliance has been riven by financial trouble ever since its main backer, supply chain finance firm Greensill Capital, collapsed into administration in March when its biggest insurer refused to renew a major contract.
Credit Suisse had given $1.2billion in borrowed money to GFG and has sought to collect back some of the funding, including through wind-up orders, but has now agreed to halt court proceedings to enable Liberty to conduct a sale.
GFG also has to contend with an investigation by the Serious Fraud Office over suspected money laundering and fraudulent trading regarding its links to Greensill. The company has denied any wrongdoing.
Leader: Liberty Steel’s parent firm GFG Alliance is run by business tycoon Sanjeev Gupta
On Monday, the Bank of England governor, Andrew Bailey, revealed that Wyelands Bank, which is part of GFG, was probed by the Bank as early as 2019.
Mr Kwarteng declared today that the complex corporate governance of GFG meant that officials at the Department for Business, Energy and Industrial Strategy had declined GFG’s request for Government support.
Yet £46million was provided in Government-backed Covid loans to the GFG through the CBILS and CLBILS loans schemes, which were administered by the British Business Bank.
‘I think that the British Business Bank was clearly under a lot of pressure to disperse loans, ‘Mr Kwarteng said. ‘What subsequently occurred is that the Bank of England now has concerns about Wyelands Bank, which it didn’t have last year when decisions about the CBILS and CLBILS were being made.’