PARIS, March 7 (Reuters) - French steel maker Ascometal went into administration on Friday, putting at risk up to 2,000 jobs in a fresh headache for the Socialist government as it tries to bring down unemployment from record levels.
Ascometal, whose roots lie in the former French steel firm Usinor that was later absorbed by No. 1 global steel giant ArcelorMittal, has been hurt by an economic downturn in Europe, particularly in the automotive sector.
Declining demand in Europe, where Ascometal generates most of its sales, has undermined a 2011 takeover of the company by U.S. investment fund Apollo Global Management, and put Apollo at odds with banks that helped finance the deal.
Friday's decision by a commercial court near Paris to put the company in administration came after Apollo failed to reach an agreement with the banks on a debt restructuring.
France's industry minister said the government would aim to find a long-term industrial solution for Ascometal and had already received expressions of interest.
"The coming weeks will be devoted to finalising these potential offers," Arnaud Montebourg said in a statement.
The steel industry is a delicate issue for the government after it failed to avert the closure of blast furnaces at ArcelorMittal's Florange plant in eastern France.
Steel production in the European Union fell nearly 2 percent in 2013 even as global output hit a record high.
Ascometal, which operates six plants in France and had sales of 969 million euros in 2011, supplies specialist steel products to the car-making, engineering and oil sectors.
Car sales in Europe fell in 2013 for the sixth year in a row, leaving demand down 25 percent from pre-financial crisis levels, although activity has picked up since the start of 2014.
French mining and metals group Eramet last month reported a 9 percent drop in 2013 sales at its alloys division, which includes specialist steel activities, saying weakness in sectors like auto offset healthy aeronautic orders.