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Czech steelmaker Liberty Ostrava to start sale process

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PRAGUE, June 12 (Reuters) -Czech steelmaker Liberty Ostrava will start a sale process and enter into reorganisation proceedings under the insolvency act, withdrawing a planned restructuring it had sought to turn around its business, it said on Wednesday.

"In view of the material risks and uncertainties that Liberty Ostrava is facing, the company decided that the most appropriate course is beginning a process aimed at selling its Ostrava operations and withdrawing the plan of a preventative restructuring so that it could enter into reorganisation," it said.

Liberty Ostrava, part of the Liberty Steel group owned by commodities tycoon Sanjeev Gupta, temporarily shut down its only operating blast furnace in October because of weak demand.

It sent most of its 6,000 workers home and entered a debt moratorium in December pending restructuring efforts.

The company got the approval of most of its creditors last month for its restructuring plan, but said on Wednesday it could not executethe plan given deteriorating market conditions in Europe and delays in the allocation of emission allowances.

It said applying for reorganisation will give it time and protection to prepare a sale process and other restructuring steps to stem growing losses.

"Liberty Ostrava is convinced that this process is in the best interest of creditors, employees and clients," it said.

Reporting by Jason Hovet. Editing by Jane Merriman and Tomasz Janowski


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