Liberty Steel completes acquisition of leased Polish plate mill for $51.55 million

Liberty Steel Group has completed the acquisition of Polish heavy plate mill Huta Czestochowa, which it started leasing in late December 2020, a group spokesperson said May 28.

The acquisition price was put at $51.55 million.

Liberty Steel Group has exercised its option to acquire the mill, with an 840,000 mt/year crude steel capacity, from the Polish administrative court. The mill had run into difficulties under its previous leaseholder, Sunningwell International, and was idled in October 2020. In December Liberty Steel Group won a lease tender organized by the administrative court, restarting its rolling mills shortly afterwards and its electric arc furnaces in mid-January.

"LIBERTY Steel Group has fulfilled its commitment to the Polish administrative court for the completion of the acquisition of the Huta Czestochowa," the spokesperson said in an emailed statement. He described the Polish mill as Europe's only producer of green, high quality steel plate produced from recycled steel, and said the acquisition strengthens Liberty's ambitions to be a major green steel producer in Central and Eastern Europe.

Company sources said that the Polish mill can be expected to increase its production of low carbon heavy plate products which can be used in major infrastructure projects due to start shortly under the Polish government's recovery plan.

Group supply synergies

The mill, one of Poland's largest, is understood to have been operating profitably in recent times as high demand for plate has pushed up prices. The feedstock is supplied from Liberty Steel Group's Ostrava works in the Czech Republic.

Company sources said that Huta Czestochowa could be expected to add further value to the Liberty Ostrava business through a range of synergies which include improving the operational stability of Ostrava's blast furnace operation, increasing the availability and reducing the price of the scrap Liberty Ostrava requires as well as making immediate positive impact on Ostrava's profitability.

A German plate buyer said: "My competitors and I continued to buy from Czestochowa. They were offering cheap so it was possible to work with the risk [of them not delivering]. Heard they have bought enough scrap and will continue to make slabs and work on the big backlog they have."

A source close to Liberty said that the Polish plant has "benefited from the group's European presence and procurement capability to secure the scrap and other material required for the restart of its EAF operation."

Sales price

A representative of the Polish administrative court told S&P Global Platts that Liberty Steel Group paid Zloty 190 million ($51.55 million) for the plate mill.

"Today, on May 28, 2021, I signed a contract for the sale of ISD Huta Czestochowa and Liberty Czestochowa paid the entire sales price in the amount of Zloty 190 million. This same steelworks has a new owner," bankruptcy trustee Mateusz Bienioszek said in a statement. "Despite the many unforeseen and unfavorable circumstances that have occurred over the past two years, I am glad that thanks to the commitment and determination of Liberty Czestochowa this transaction was successfully finalized," he added.

Liberty Czestochowa paid Zloty 171 million on May 28 because it had already paid Zloty 19 million as the bid bond in the third sales tender in January. The Zloty 190 million starting price in the third tender was Zloty 60 million less than in the first tender and Zloty 30 million less than in the second tender, according to information supplied by the trustee.

Liberty Steel Group, which is facing cash-flow problems following the collapse of its main financier, Greensill Capital in March, declined to say how the purchase of the Polish mill was financed.

In a subsequent interview with the industry portal wnp.pl, Bienioszek said the transaction saved 1,200 jobs at the steelworks.