Liberty Steel's Gupta may secure £200m bailout

Sanjeev Gupta, the owner of beleaguered steel company Liberty Steel, may be on track to secure a £200 million (€230 million) loan to help bail the company out and prevent thousands of job losses.

Gupta is in talks with California-based investment firm White Oak Global Advisors. A skeleton deal has been drafted but is still in its early stages.

This news comes nearly a month after the UK rejected a bailout offer, a decision which was defended by business secretary Kwasi Kwarteng.

Read more: Liberty Steel's future in doubt following bailout rejection

The need for a bailout came after the collapse of Greensil Capital, a major backer in the steel company, leading to 440 facing redundancy and leaving thousands more jobs in jeopardy.

Gupta applied for a loan in late March, which reportedly involved former Prime Minister David Cameron lobbying for the group.

Any new loan put through will require the approval of Gupta Family Group's (GFG) creditors.

If approved, the loan from White Oak could allow for Liberty to return to full production after having paused operations in an attempt to cut costs following Greensil's collapse.

The injection of new cash could increase the chances of Liberty creditors gaining a greater amount of the money owed to them owing to increased production and a rise in steel prices.

However, owing to the deal still being in its infancy, there is no guarantee it will surface.

Kwarteng rejected the initial plea for a bailout owing to the company being "opaque" and not having all its assets accounted for.

However, the government pledged to preserve Liberty in some way and said it will consider "all options."

The business secretary told the BBC in April that he wanted to give the company "more time to finance" before any decision is taken.

The Labour Party has since called for the Johnson government to step in to prevent further job losses across the supply chain as well as save millions of pounds.

Greensill is currently planning to liquidate some of the assets Gupta pledged in order to remain afloat. In a statement, the company claims to be in the process of "refinancing" and "prudently managing cash" across its global operations.

Reports suggest Liberty Steel owes Greensil as much as £553 million (€636 million).

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The company announced on Wednesday it was appointing four new board members in order to "protect and maximise creditor and stakeholder value."

To this end, it is setting up a new Restructuring & Transformation Committee (RTC) which will be given full autonomy to restructure the company's operations to focus on core profitable units, and either fix or sell underperforming units, Liberty claims.

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