Sanjeev Gupta GFG Alliance is fighting to negotiate a stay on its obligations to Greensill Capital as the dismantling of its biggest lender threatens to bring down the metals group.
A standstill debt deal with Greensill, who filed for administration on Monday, would help GFG avoid insolvency and avoid a fire sale of assets, according to people familiar with the matter, who asked not to be named because the talks are private. Gupta is separately seeking to raise new funding to replace Greensill’s loans, they said.
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The abrupt collapse of Lex Greensill’s activity shut down funds managed by Credit Suisse Group AG and forced Japan’s SoftBank Group Corp. to write down its $ 1.5 billion investment in the supply chain finance company. Now that risks bringing GFG down, with governments from London to Paris monitoring the threat to 35,000 jobs at a company that ranges from steel to renewables.
In the UK, Prime Minister Boris Johnson’s administration is in constant contact with Gupta’s steel division about the impact on UK factories and jobs, a person familiar with the matter said. GFG employs around 5,500 people across the UK, including at an aluminum smelter in Scotland. In France, Finance Minister Bruno Le Maire said the government would support GFG employees and its industrial sites if Greensill’s difficulties put them at risk.
GFG “began to default” after Greensill stopped loaning to the group in early March, according to court documents. Greensill’s exposure to the metal group was $ 5 billion, one of the people said.
British unions met with GFG executives on Tuesday amid fears of job losses in the Gupta empire. The former India-born commodities trader had previously been called the “savior of steel” for his tendency to buy unloved factories and foundries. GFG, a group of companies it owns, covers 30 countries.
“Although Greensill’s difficulties have created a difficult situation, we have adequate funding for our current needs,” GFG said in an emailed statement, adding that attempts to secure alternative funding “will take some time. time to organize “.
Negotiations on debt relief may not result in a deal, the people said. Grant Thornton’s partners were named joint Greensill directors on Monday.
A spokesperson for Grant Thornton declined to comment.
The collapse of Lex Greensill’s eponymous company cast a shadow over the business of Gupta, which was heavily dependent on its funding for a wave of acquisitions of $ 6 billion over five years. In Monday’s court filing, Greensill said its biggest client by value had fallen into “serious financial difficulty,” and warned last month it was risking insolvency without its funding.
The news Greensill tabled for administration is “of great concern to unions and the workforce,” said a spokesperson for the UK’s National Trade Union Steel Coordinating Committee. “The government must play an active role in facilitating a comprehensive solution.”
The Australian Workers’ Union has met with management of the GFG steelworks in Whyalla, South Australia on an ongoing basis, National Secretary Daniel Walton said in an emailed statement.
GFG took ownership of Whyalla in 2017 with a bold plan to increase production and invest in renewables to lower energy costs. Steel mills are now profitable and the global outlook for steel demand is good, Walton said.
A spokeswoman for Australian Industry Minister Karen Andrews said the government was “monitoring the situation closely” but declined to comment further on the potential impact of Greensill’s difficulties.
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