UK ministers have rejected an application from metal tycoon Sanjeev Gupta for an emergency loan to prevent his group from falling apart while seeking rescue funding.
Gupta wrote to industry ministers last week asking for £ 170m to help with working capital such as its metals and commodities empire, GFG Alliance, buckles under billions of dollars of debt. The collapse of its main lender Greensill Capital earlier this month has prompted the group, which has $ 20bn in turnover and employs 35,000 people across four continents, to look for money other.
The government wrote back late last week formally rejecting the request and citing several concerns, according to people familiar with the situation. The Financial Times reported on Friday that ministers were expected to reject the bid due to concerns about the unclear governance and structures of Liberty Steel, GFG’s steelmaking industry, which is the UK’s third largest metal producer. There were also concerns about whether taxpayer funding would remain in the UK if help were provided.
GFG declined to comment.
Ministers are staying at the festival in the event of GFG’s fall and have devised contingency plans to step in and overrun British activity. British steel was similarly backed by the UK Treasury in 2019 before it was finally sold to a Chinese steel group.
GFG is still in talks to secure long-term funding from other providers after Greensill filed for bankruptcy. It is understood that one catching point is being approved by Greensill, which has security over some GFG funds, to allow other funds to be raised. Troubleshoot the situation that administrators to Greensill are still trying to establish the identity of all investors in the finance company and their position within the funding chain.
Formerly a commodity trader, Gupta built his sprawling empire through a series of fast-paced steelworks that have struggled in the past five years.
The cluster of private businesses has often relied on complex financing. The FT revealed on Friday that forecasts compiled by advisers had given the UK, European and Australian GFG funds a net equity value of just $ 123m after taking over more than $ 3.5bn in debt. near.
The unions have urged the government to consider all options to help protect the 5,000 endangered jobs in the UK. Steve Turner, deputy general secretary for manufacturing at Unite, said, “no choice should be denied in terms of safeguarding the future of Liberty Steel and that must include an option to nationalizing the industry ”.