Owner of Romania’s biggest steel mill faces financing problems

British group GFG Alliance, which owns Romania's biggest steel mill - Liberty Galati (formerly known as Sidex), may face financing problems after one of the group's main financiers, Greensill Capital, filed for insolvency, Ziarul Financiar daily reported.

Fund manager Greensill Capital was recently unable to repay a USD 140 million loan to Credit Suisse.

FT reported that Greensill Capital's insolvency might be linked to GFG Alliance's financial problems.

According to documents submitted to the court, GFG said in February that it would face insolvency if Greensill stopped financing its working capital.

In his talks to unions in the UK, GFG Alliance owner Sanjeev Gupta admitted that the fall of his group's biggest financier has generated "a difficult situation."

He also said that some of Liberty Steel's operations recorded losses and the group must address this problem.

In 2019, British-Indian billionaire Sanjeev Gupta bought the Sidex plant in Galati, which he turned into Liberty Galati, in a giant transaction of EUR 740 million, which included six other production units in Europe formerly owned by ArcelorMittal.

The new owner also announced a EUR 1.2 bln investment plan at Galati. The investment plan aims to make the company carbon-neutral within five years.

In partnership with state-controlled Romgaz and financed by state-owned bank Eximbank, Liberty Galati plans to develop a gas-fired power plant to be later retrofitted for using hydrogen. The company will also invest in renewable energy units (wind farms and PV parks).

The investment plan also includes expanding the yearly production capacity at Liberty Galati from 2 million tons of steel to 4 million tons. Besides Liberty Galati, Sanjeev Gupta also bought a small bank in Romania - BRCI - founded by Romanian construction mogul Dorinel Umbrarescu.

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