GFG Federation Sanjeev Gupta is fighting to rebalance its debt obligations to Greensill Capital as the spread of its largest lender threatens to take down the metals company.
A debt stop agreement with Greensill, which was submitted for administration Monday, would help GFG dispel dissatisfaction and avoid a fire sale of assets, according to people familiar with it. the case, who asked not to be named because the conversations are private. Gupta is particularly keen to raise new funds to replace Greensill loans, they said.
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The sudden collapse of Lex Greensill’s business has shut down money run by Credit Suisse Group AG and forced SoftBank Group Corp. Japan wrote down their $ 1.5 billion investment in the supply chain finance company. There is now a risk of GFG being slowed down, with governments from London to Paris monitoring the risk to 35,000 jobs across an industry that spans steel into renewable energy.
In the UK, the administration of Prime Minister Boris Johnson is in constant contact with the Gupta steel department about the impact on British factories and jobs, said someone familiar with the matter. 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 workers and its business sites, if Greensill’s problems endangered them.
GFG began “engaging in its responsibilities” after Greensill stopped lending to the group at the beginning of March, according to court documents. Greensill ‘s knowledge of the metals group was $ 5 billion, one of the people said.
UK unions met with GFG officials on Tuesday amid fears of job losses across the Gupta empire. The Indian-born commodity trader had previously been a “steel liberator” for tending to buy unsold mills and smelters. GFG, a dispersed group of its owners, spans 30 countries.
“While Greensill’s difficulties have created a challenging environment, we have sufficient funding for our current needs,” GFG said in an e-mail statement, adding that efforts will take time on other funding. get “set time.”
Negotiations over debt repayment may not continue to a contract, the people said. Partners at Grant Thornton were announced as Greensill co-administrators Monday.
A spokesman for Grant Thornton declined to comment.
The collapse of the eponymous company Lex Greensill has overshadowed the Gupta business, which relied heavily on its funding for a $ 6 billion construction spree over five years. In a court filing Monday, Greensill said the largest value consumer had fallen into a “real financial crisis,” and had warned last month that he was against bankruptcy. without funding.
The news that Greensill has filed for administration is “a matter of great concern to unions and workers,” said a spokesman for the UK National Trade Union’s Steel Coordinating Committee. to enable a complete solution to be made possible. “
The Australian Workers’ Union has been meeting with the regulators at GFG’s Whyalla steelworks in South Australia on an ongoing basis, National Secretary Daniel Walton said in an emailed statement.
GFG took over Whyalla in 2017 with a bold plan to boost productivity and invest in renewable energy to reduce energy costs. The steelworks are now profitable and the global prospects for steel demand are good, Walton said.
A spokeswoman for Australian Business Minister Karen Andrews said the government was “closely monitoring the situation,” although they declined to comment further on the potential impact of Greensill’s problems.