3,000 steel jobs at risk as Gupta defaults
FIVE thousand UK steel and manufacturing jobs were on the line last night after the main lender to Sanjeev Gupta’s empire plunged into administration.
Specialist finance house Greensill Capital was the biggest backer of the steel magnate’s collection of companies, the GFG Alliance. This group includes Liberty Steel, which employs 3,000 people at 11 steel plants in Britain.
Another 2,000 GFG staff in the UK work at manufacturing sites. Gupta also owns Scotland’s only aluminium smelter.
Court documents filed by Greensill yesterday included a letter sent by GFG in February that warned it would collapse into insolvency if Greensill went under and stopped providing it with money.
Greensill had about £3.6bn of exposure to
GFG, the papers showed. The lender also said GFG had already started to default on its payments.
Gupta, a 50-year-old Indian born British tycoon, was dubbed the ‘saviour of UK steel’ after a spending spree that saw him buy up plants in Rotherham, Stocksbridge in South Yorkshire, Newport and Hartlepool.
When Greensill began running into difficulties a couple of weeks ago, Gupta is understood to have tried unsuccessfully to seek loans from other lenders.
Unions and politicians were last night desperate to find out from him what Greensill’s implosion will mean for GFG’s factories in the UK and thousands of workers. The chief executive of Liberty Steel, Jon Ferriman, held talks with business secretary Kwasi Kwarteng on Sunday.
But nationalising the steel sites was not part of the contingency plans discussed.
Unions are due to speak to Gupta today and have been growing increasingly frustrated with the lack of transparency around the funding crisis. A representative from steel union Community said: ‘Sanjeev Gupta needs to tell us exactly what the administration means for Liberty’s UK businesses and how he plans to protect jobs.
Gupta has not spoken publicly since it was first reported more than a week ago that Greensill was in trouble.
But there are growing expectations that Gupta will launch a fire sale of GFG’s assets, with potential buyers already lining up to pick off parts of the group.