Asset Freeze Issued by ArcelorMitta on Liberty Steel for €140 Million Debt

ArcelorMittal steel

ArcelorMittal recently obtained a freeze order from a Singaporean court against Liberty Steel. The order totals €140 million ($150 million) and relates to the prospective sale of Liberty Steel assets. According to reports, the Luxembourg-headquartered group acquired a court injunction from a Singapore court on Nov. 1. That injunction prohibits Liberty from removing any assets from the city-state up to the stipulated amount.

However, GFG played down the Singapore court order, stating, “We have applied to overturn the order, and the Singaporean companies referred to as having their assets frozen are non-trading holding companies, so [they] have no operations. This has absolutely no impact on any of our businesses, suppliers, or customers.”

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Freeze Part of a Five-Year-Old Deal

A source within ArcelorMittal told MetalMiner that the primary issue is an outstanding balance from ArcelorMittal’s €740 million ($795 million) sale of several European plants to Liberty back in 2019.

Liberty Steel owes a significant debt by ArcelorMittal

At the time, the European Commission, the European Union’s executive arm, required ArcelorMittal to divest several of its European plants. This proved part of a merger control investigation into the group’s acquisition of Italian steel-making group Ilva. The investigation completed in 2018.

On July 1, 2018, ArcelorMittal formally announced the sale of its Czech and Romanian plants. The two plants were located at Ostrava and Galati, respectively, as well as a flats roller in North Macedonia to Liberty Steel. In the same announcement, the company stated that Liberty affected payment of €610 ($655 million) on June 28.

Further west in Europe, ArcelorMittal also sold Italian plant Piombino, Dudelange in Luxembourg. ArcelorMittal also sold several finishing lines at Liege in Belgium. These, too, sold to Liberty, proving part of the same overarching transaction. The sale totaled 6.4 million metric tons of crude steel capacity, plus an estimated 90 million metric tons of various rolling and downstream capacities.

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ArcelorMittal Debt Part of a Bigger Pattern with Liberty Steel

Reports indicate that a London arbitration court also awarded €140 million against Liberty in January. An English high court recognized this action in February.

“As Sanjeev Gupta’s companies have not made any sort of payment against the award and have ignored any requests for payment, ArcelorMittal must now undertake a multi-jurisdictional enforcement process,” the company’s lawyers remarked.

steel rolling facility

Liberty Steel’s parent company, GFG Alliance, became another target of insolvency claims in UK and Romanian courts. This comes after the March 2021 collapse of its main lender, Greensill Capital.

Greensill’s exposure to GFG Alliance, which totaled up to $5 billion, plus an announcement from a consortium of insurance lenders that it would stop providing coverage, were behind that lender’s entrance into insolvency protection. Reports also stated that defaults by GFG were a primary factor in Greensill’s collapse.

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