Sanjeev Gupta-led Liberty Steel Group has emerged as the preferred buyer for the assets of Louisiana-based Bayou Steel group, which filed for bankruptcy protection in September.
Liberty Steel has bid $28mn in cash for the idled plant of Bayou Steel in LaPlace, according to local media. Liberty Steel is part of the GFG Alliance. Liberty Steel’s immediate focus is to restore the steel recycling supply chain and operations at LaPlace, as per GFG’s investment officer. Liberty Steel intends to resume Bayou’s recycling operations in the second half of 2020 and steel production by 2021.
Beside the LaPlace plant, Liberty is also interested in acquiring Bayou Steel’s rolling mill operation in Tennessee and depots in Oklahoma, Pennsylvania and Chicago. Through this buyout, Liberty plans to increase its total production capacity in the US to 3mn mt/yr.
Background
Bayou Steel abruptly shut operations on Sep 30 and was put into Chapter 11 bankruptcy by its owner Black Diamond Capital Management. No reason was stated for the plant’s closure, but as the company used imported recycled scrap, an increase in tariff on scrap steel and iron, followed by a subsequent slump in steel price and demand impacted Bayou Steel’s margins negatively.
Black Diamond had operated Bayou Steel since 2006. In 2008, it sold the steelmaker to ArcelorMittal for $475mn and then bought it back from ArcelorMittal in 2016.