Romanian steel factory Liberty Galatî faces potential bankruptcy following tax agency's rejection of their restructuring proposal.
In a significant turn of events, the National Agency for Fiscal Administration (ANAF) has rejected the restructuring plan of Liberty Galati, Romania's largest steelmaker, raising concerns about the company's future and the potential impact on public finances.
Liberty Galati, strategically important to Romania's industrial sector, had agreed to a 42-month repayment plan for its debt to ANAF back in March. However, ANAF has twice rejected the plan, indicating that they may view the proposal as too lenient or risky, potentially leading to further financial instability for the company.
The steelmaker, which employs approximately 4,900 people, owes ANAF around €150 million, making it one of the company's main creditors. Liberty Galati's overall debt exceeds €400 million, with over 1,200 creditors, including EximBank, which is owed €300 million.
The rejection of the restructuring plan comes as the company faces operational and financial challenges amid fluctuating global steel markets and rising energy costs. The facility, previously owned by ArcelorMittal, was acquired in July 2019 by Sanjeev Gupta's GFG Alliance.
Remus Borza, president of Euro Insol, has warned that the rejection of the proposed restructuring plan will lead to bankruptcy. Euro Insol, which has been working to pay off ANAF's claim, has announced that it will unilaterally terminate its contract with the plant following ANAF's decision. However, Euro Insol has not yet terminated the contract, requesting an extension of 30 days from the Galați Tribunal to continue negotiations and secure enough creditor support.
Despite the obstacles, Liberty Galati has shown resilience, with its losses narrowing to RON 1.6 billion (EUR 320 million) in 2023, down from RON 1.1 billion the previous year. The company also reported a turnover of RON 2.1 billion (EUR 420 million) at the end of the year, a decrease from RON 3.6 billion in 2022.
As the situation unfolds, the tension between supporting a major industrial employer and managing the financial risks associated with restructuring a heavily indebted company remains palpable. The outcome will have far-reaching implications for Romania's industrial sector and public finances.
[1] Source: Local media reports [2] Source: Liberty Galati's financial statements [3] Source: Euro Insol's announcements
The rejection of Liberty Galati's restructuring plan by ANAF could have significant implications for Romania's financial industry and business sector, as the steelmaker's debt exceeds €400 million, with public finances being a major creditor. The potential bankruptcy of Liberty Galati, strategically important to Romania's industrial sector, could further destabilize the company's over 1,200 creditors, including EximBank, which is owed €300 million.
