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The biggest Czech steel mill, Liberty Ostrava, part of UK-based Liberty Steel Group, has asked the regional court in Ostrava for protection from creditors.
Liberty Ostrava has 30 days to submit the restructuring proposal to the court in order to avoid bankruptcy.
Czech business daily Hospodarske noviny (HN) reported Liberty Ostrava's plans are backed by all of its creditors.
“Tameh is ready to fully cooperate so that operation and employment are maintained,” Patrik Schober, spokesperson of one of the largest creditors, energy supplier Tameh, was quoted as saying by HN.
Labour union boss Liberty Ostrava organisation Petr Slanina confirmed the developments to Czech Press Agency (CTK), saying he has no further details at the moment.
CTK reported that Liberty Ostrava's restructuring plan expects the steel market to pick up in the first quarter of 2024 and the company to receive a boost from a strategic investor who would inject €200mn.
The company's restructuring would also involve sales of redundant real estate and land property worth CZK250mn (€10.3mn), and Liberty Ostrava also plans to abandon its coke production.
According to HN, Liberty Ostrava also owes about CZK1.5bn (€62mn) to the Czech state insurer EGAP, through which the state helped Liberty Ostrava during the COVID-19 pandemic. All creditors have reportedly agreed to delayed payment timetables.
Earlier this month, when Liberty Ostrava shuttered oven no. 3, its spokesperson Katerina Zajickova told Czech media the company won't lay off any employees.
Czech Minister of Industry and Trade Jozef Sikela said the state would do its most to "solve the issue with this company" including "taking care" of the employees.
Liberty Ostrava is an integrated steel business with an annual production capacity of approximately 3.6mn tonnes. It supplies more than 40 countries around the world. It is part of Liberty Steel Group and the London-based GFG Alliance, which are owned by Sanjeev Gupta and his family.
In a separate development earlier this week, Sikela confirmed Czechia asked for an extension of the exemption from EU sanctions on Russian steel imports.
“I firmly believe that an approach will be maintained that sanctions should primarily hurt those against whom these are aimed and not those who are enforcing [sanctions]”, Sikela was quoted as saying by CTK ahead of a EU ministers meeting in Brussels on November 27.
Earlier this month, Politico reported that Czech diplomats made the request to extend the existing exemption on imports from the Russian NLMK company, which is also a steel supplier to Belgium and Italy.
CTK reported that Ostrava-based Vitkovice Steel has been seeking an exemption on Russian steel imports until 2028.
The spokesperson of Vitkovice Steel, Jana Dronska, told CTK that disruption in steel imports could lead to a crisis in the construction sector as well as the country’s key automobile sector.
Czech industry contracted by 5% year on year in September as the country's analysts pointed out disruption in supply chains in the car industry as quickening the industrial decline in September.
Earlier this month, Vitkovice Steel entered insolvency proceedings. Czech business daily E15 reported the company is working on a reorganisation plan, and Indian Vulcan Steel would take over its shares.
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