LONDON/STRASBOURG, Jan 26 (Reuters) - The Strasbourg court in charge of selling troubled French steelmaker Ascometal has raised questions over public funds as part of the bid by UK-based metals and industrials firm Liberty House, a union representative at the hearing told Reuters.
Asked about the court's questioning of the bid's funding, a spokesman for Liberty House said: "We are requesting no support from the State. We have been offered carbon refunds that are available to all businesses. Regional funding supports our growth plan ... and is available to all businesses."
Liberty House, which has been snapping up distressed steel and aluminium assets around the world, is a top contender to take over Ascometal alongside rival Swiss-based specialty steelmaker Schmolz + Birkenbach.
The two groups presented their respective bids to the District Court in Strasbourg on Wednesday.
Ascometal, which makes specialty steel, filed for court protection last November.
Yann Amadoro, a representative of the CGT union who was present at the hearing on Wednesday, said the court had questioned the financing "and the fact that they didn't obtain all (the public funds) they wanted."
A source close to the court also confirmed that the court queried Liberty's funding.
Liberty House has secured 20 million euros of funding from three French regions for its bid and 5 million euros in carbon tax credits from the French state. It was originally looking for 30 million and 10 million euros, Amadoro said.
If Liberty's bid to takeover Ascometal fails, it will mark an unusual blip in the privately-owned firm's rapid expansion.
Liberty is part of British tycoon Sanjeev Gupta's GFG Alliance, a $10 billion industrials, energy and commodity group that is looking to list a steel asset in the United States this year or next, having recently listed an energy asset in London.
Ascometal, which employs more than 1,300 people, was taken over by a group of French investors led by former finance ministry official Frank Supplisson in 2014 after it filed for bankruptcy. The investors had recourse to public funds but their venture eventually failed, leading to last year's filing.
"We experimented with Supplisson, who launched into (Ascometal) with too light a financial package," said Alain Hibold, a representative of the CFDT union.
Liberty House is offering to invest 300 million euros in both Ascometal and Ascoval, a joint venture between Ascometal, which owns 60 percent, and French steel pipe maker Vallourec , which owns 40 percent.
Ascoval employs some 300 people.
Schmolz + Birkenbach is offering to invest 195 million euros in Ascometal only, but has promised to support Ascoval by purchasing its steel for two years, an industry source told Reuters.
As Europe's largest specialty steelmaker, a Schmolz takeover of Ascometal would represent industry consolidation.
Liberty House, whose assets span carbon and specilaty steelmaking, aluminium smelting, engineering and commodities trading, has secured a loan of 37-38 million from Vallourec for its purchase of Ascoval, according to the CGT union's Amadoro.
Liberty declined to comment and Vallourec was not immediately available to comment.
Workers at three out of the five Ascoval and Ascometal sites voted in favour of the offer by Liberty House, but the Central Committee representing unions CGT, CFDT and CFE-CGC does not favour one offer over the other.
The Strasbourg court will decide on the winning bidder on Monday. (Reporting by Maytaal Angel and Gilbert Reilhac, editing by David Evans)