Liberty Steel jobs tied to Belgian court's creditor protection

Luxembourg's point man for saving more than 200 jobs at a Luxembourg steel plant has his eye on a Belgian court as the government works to preserve the important industrial site, lawmakers said on Wednesday.

Economy Minister Franz Fayot updated members of the Parliament's economic committee about prospects for struggling Liberty Steel and its operations in Dudelange, where lack of work has forced almost 40% of the roughly 220 employees onto government support.

Fayot declined an interview request through a ministry spokesperson, but lawmakers in the meeting described the update.

One potential turning point is the pending end in the next two weeks of court protection from creditors for Liberty Steel's two factories in Belgium. The court action in place since May does not include the Luxembourg plant, which is operationally linked to the Belgian factories.

"It is now being negotiated - legally negotiated - whether there can be an extension" of the creditor protection, said Lydia Mutsch, a lawmaker from Fayot's LSAP party.

Company spokespersons declined to answer on Wednesday whether Liberty Steel has been able to use the Belgian court protection to find new financing and keep the Liège and Dudelange plants operating.

The government of the French-speaking Belgian region of Wallonia last month agreed to loan Liberty Steel money that could be used to organise the sale of the Liège and Dudelange plants, Belgian newspapers and steel industry trade publications reported.

Liberty Steel's Ascoval and Hayange plants in northern France and three other factories in the UK are reportedly for sale.

Liberty Steel and the UK-based metals and mining conglomerate of which it is a part, GFG Alliance, have been struggling to find new financing since March when GFG's main lender collapsed into administration in the UK. In May, Britain's Serious Fraud Office launched an investigation into GFG Alliance over suspected fraud and money laundering, adding further jeopardy to the jobs of the more than 30,000 steel and other workers employed worldwide. GFG denied wrongdoing and pledged to cooperate with the SFO.

"I think Mr. Fayot was relatively clear when he says that he's not excluding any option" including taking a share of the steel company as earlier governments have when important companies like Cargolux or BGL bank have faced financial trouble, said Laurent Mosar, a member of the opposition CSV party.   

The main risk is that creditors force Liberty Steel to sell the Dudelange plant in an asset liquidation process, with unpredictable consequences, he said.   

"The essential question is how long the government will continue to accept this very difficult situation", Mosar said.

Fayot told lawmakers there was no indication that the European Union’s competition authorities would consider an exception and allow former Dudelange plant owner ArcelorMittal to repurchase the site, Mutsch and lawmaker Audre Bauler said.

"At this moment, a takeover by ArcelorMittal is not possible", Bauler, a member of Prime Minister Xavier Bettel's Democratic Party, described Fayot as describing. "But there is also a certain consideration by the European Commission, where there is a certain degree of openness."

European Commission Vice President Margrethe Vestager seemed to create an opening earlier this month for those who want to reverse the Luxembourg and Belgium factory sales by ArcelorMittal to Liberty Steel in 2019.  ArcelorMittal was forced to sell the Liège and Dudelange plants along with others in Italy, Romania, Macedonia and the Czech Republic in order to buy Europe's largest steel factory in Italy. Liberty Steel stepped in as the European Commission sought to ensure the steel market remained competitive.

“EU competition law prohibits ArcelorMittal from reacquiring production sites it has decided to divest, unless it can be proven that the situation and market dynamics have changed dramatically”, Vestager wrote two weeks ago in response to four MEPs from Luxembourg and Belgium.

European Commission spokespersons would not say whether Vestager’s response suggested that Liberty Steel’s woes changed market dynamics so dramatically that ArcelorMittal could now repurchase the plants. 

Fayot's ministry "took note of the recent position taken by European Commissioner Vestager" and launched an exchange of communication in recent days on that question, ministry spokesman Paul Zenners said in an email on Wednesday. 

The result was that Vestager did not see the "new exceptional circumstances" which would create an exception to competition rules, Zenners wrote."Therefore, a possible takeover of the assets of Liberty Steel in Dudelange by ArcelorMittal is not on the agenda at this stage", Zenners wrote.

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