ArcelorMittal poised to swoop for Gupta’s French steel plants

ArcelorMittal, one of the world’s biggest steel producers, is among a number of companies poised to swoop for the French steel plants of beleaguered metals tycoon Sanjeev Gupta.

German steel producer Saarstahl and Italy’s Beltrame Group are also in the running to buy Gupta’s French plants Ascoval and Hayange, sources familiar with the situation confirmed.

ArcelorMittal declined to comment. Saarstahl and Beltrame could not be reached for comment. 

The Financial Times revealed earlier this month that Gupta’s Liberty Steel, the steel division of his metals conglomerate GFG Alliance, had put the two plants in north-eastern France up for sale after failing to refinance them.

Liberty Steel only bought the Hayange mill last August after its previous operator British Steel collapsed into insolvency.

Ascoval was formerly controlled by Greybull Capital, the private investment company that owned the UK steelmaker, and was bought by Liberty at the same time. 

GFG has been scrambling to find new sources of finance since its main lender Greensill Capital collapsed into administration in March.

The group has also been hit by suspicions of fraud, which the Serious Fraud Office is investigating. 

The sale of the two French plants is being closely watched by the government.

Hayange, near the German border, is considered a strategic national asset because it makes steel rails for France’s railways and the Paris metro. Ascoval operates an electric arc furnace for recycling scrap. 

The French government in March provided a €20m loan to the two plants. It has said it is willing to support the workers and sites hit by the troubles at GFG, but will not bail out shareholders. The loans were given under the condition that the company would be able to raise fresh financing.

The formal sales process was begun at the end of April, according to one person familiar with the situation. Rothschild is advising on the sale.

GFG said it remained “confident” of securing new financing, given the strength of the steel market, despite the two sites facing a “significant reduction in working capital support” since Greensill’s collapse.

“At the same time, we are taking prudent steps to explore sale options for these businesses and will be inviting interested parties to submit offers,” the company added.

GFG is also selling three UK speciality steel plants, including its operations at Stocksbridge in Yorkshire, as it seeks to stave off a wider collapse.

Sources familiar with the situation said that a number of potential interested parties had come forward in recent days.

GFG has been trying to refinance its British operations but talks with White Oak Global Advisors, a US-based private finance group, faltered after news of the SFO probe broke. GFG has said it will co-operate with the investigation.

Jingye Group, the Chinese owner of British Steel, has told government officials it is willing to step in to take on parts of Liberty Steel. The company, however, is understood to be specifically interested in Liberty’s steelworks at Rotherham, which GFG has said is not for sale.

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