‘Liberty Steel seeking funding but on firm ground for now’
SANJEEV GUPTA ALLAYS CONCERNS OVER JOBS AS LENDER FILES FOR INSOLVENCY
LIBERTY Steel has adequate financing to meet its current requirements and is seeking long-term alternatives, its owner Sanjeev Gupta told British trade unions on Tuesday (9), after major financial backer Greensill Capital went into administration.
Trade unions had demanded assurances about Liberty, which is Britain’s third largest steelmaker with 3,000 workers and part of the Gupta family’s GFG Alliance conglomerate, after Greensill Capital filed for insolvency on Monday (8).
The insolvency filing came after Greensill Capital lost insurance coverage for its debt repackaging business. It said in its court filing that GFG Alliance, its largest client, had started to default on debts. Greensill had about $5 billion (£3.6bn) of exposure to GFG, the Financial Times reported, citing Greensill’s lawyers.
“We have adequate funding for our current needs while we bridge the gap to refinancing the business,” Gupta said in prepared remarks provided by a source close to the meeting. Securing alternative longterm funding is progressing well but will take some time to organise.”
The court document supporting Greensill’s insolvency application said that without insurance it was no longer able to sell notes backed by debts to investors, nor fund clients such as GFG in return.
“GFG has fallen into severe financial difficulty,” the court filing said. “GFG has started to default on its obligations.”
GFG said in a statement on Tuesday that the group as a whole was operationally strong, and was benefiting from a 13-year high in steel prices.
It said, however, that some parts of the British business were under pressure, including the speciality steel business.
Gupta said the group was dealing with underperformance. “We are addressing the parts of the UK steel business which are currently loss making.”
Last week, GFG said it had adequate current funds and that its businesses were operationally strong.
Trade unions said in a statement that they had told Gupta that “all options should be considered” to secure the future of all Liberty Steel’s UK assets. “We believe government must take an active role to facilitate a comprehensive solution that safeguards the future and protect jobs,” the joint trade union statement said.
Gupta has amassed a portfolio of assets, mostly in steel and aluminium, by acquiring troubled operations and turning them around.
Accountancy firm Grant Thornton said it had been appointed administrator of Greensill’s two core UK firms, which oversaw its business of buying short-term debt and converting it into bonds for sale.
Grant Thornton has agreed in principle to sell Greensill’s intellectual property and technology platform for processing client payments to US private equity group Apollo Global Management Inc. for $60 million, the court filing said.