(Bloomberg) -- Metals magnate Sanjeev Gupta’s efforts to sell his troubled Liberty Ostrava steelworks hit a setback as the Czech government said potential buyers had lost interest in taking over the company.
Gupta’s Liberty Steel has been looking to divest its Czech operations after a court declared the dormant unit with about 5,000 employees insolvent and an overhaul strategy failed. But late on Thursday Finance Minister Zbynek Stanjura said there were no takeover offers for the company’s main business and that the state wouldn’t provide further major financial aid.
“Unfortunately there is currently no one interested in the primary steel production,” Stanjura told a news conference. “We are looking for a solution which would enable the largest possible number of employees to return to work as soon as possible.”
At the same briefing, labor union official Roman Durco said initial interest from potential investors had petered out over the past few months.
Stanjura and Durco said there was one offer for a smaller part of Liberty Ostrava that makes steel products, and they expressed hope that at least that business could be salvaged. The government is also seeking to limit Gupta’s influence over the unit and give a bigger say to creditors, including the state, according to Stanjura.
Gupta’s sprawling empire GFG Alliance has been under pressure since the collapse of Greensill — the tycoon’s top lender — starved his businesses of funding, causing some to fall into insolvency.
GFG’s steel operations have also suffered from competition of cheaper imports to Europe. Liberty shut down smelting and coking plants in Hungary after buying the insolvent Dunaferr steel plant there just a year ago.
Czech officials have repeatedly called on Liberty to repay about €400 million ($435 million) that they said Gupta’s other businesses abroad owe to the Czech unit.
The factory, located in one of the poorest regions of the Czech Republic, has an annual capacity of about 3.6 million metric tons of products for constructions, machinery and oil and gas industries. It halted production late last year when its key energy supplier, Tameh Czech, stopped power supplies to the plant over missing payments and claimed insolvency.
Most employees have been on leave on partial pay since December, with the Czech state covering wages for May, June and July.
“Unfortunately, the company is in a very difficult situation,” union official Durco said on social media platform X. “The owner is also extending the uncertainty through various forms of legal maneuvering. That is, month by month, reducing interest from potential investors.”
--With assistance from Marton Kasnyik.
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