Liberty Steel Ostrava's restructuring plan envisages the business becoming a one-furnace operation focusing on flats and tubes, and limiting longs output.
This would reduce production costs by more than €200mn/yr, based on production of 80,000t/month, according to the restructuring plan seen by Argus.
Liberty is proposing two restructuring plans, one of which is based on it not reaching an agreement with its energy supplier, Tameh Czech, which is owed around 2bn koruna (€79mn) by Ostrava and maintains it has not been paid since June.
The largest single creditor after Tameh is plant-maker Danieli, which had been contracted to install electric arc furnaces at Ostrava. Work on that transition stopped some time ago because of a lack of funds, according to sources close to Liberty.
Secured creditors include the Czech export guarantee and insurance corporation EGAP, which has agreed a payment plan with Ostrava, and Greensill Bank — talks are ongoing with Greensill and it is expected a standstill will be reached in the "near future", with a payment plan arranged similar to that with EGAP.
Under restructuring plan A, which envisages an ongoing relationship with Tameh, creditors would be paid 25pc of their outstanding amount on 30 June, with the remaining 75pc paid in 18 monthly instalments from October 2024-March 2026.
Under plan B, with no ongoing relationship with Tameh, the first 25pc is due on 31 December, with the remaining 75pc paid in nine monthly instalments from April 2025-December 2025.
Ostrava is rolling coil at present from slab, imported from Russia and Asia, according to market sources. But the creditor plan says it is running below "optimum capacity" and is "unable to ensure its sustainable operation and the repayment of the claims".
The mill plans to procure 30,000t of slab, ramping up to 50,000t and then 80,000t, until the blast furnace is restarted, which would be on 1 June in the event of an agreement with Tameh or 1 January 2025 without one.
Ostrava is owed more than Kc8.2bn by related Liberty entities, including Kc6.2bn by Liberty Finance Management, according to the creditor information. It will be taking loans from related entities to allow it to "restore and maintain" operations. Ostrava owes creditors, not including Tameh, Kc2.3bn, meaning it could repay Tameh and all creditors with monies owed from within the group.
