Sanjeev Gupta in talks about deferring Greensill Capital’s debt


Sanjeev Gupta’s GFG alliance is struggling to negotiate a deferral of its debt to Greensill Capital as the liquidation of its largest lender threatens to topple the metals giant.

A debt standstill deal with Greensill, filed for administration on Monday, would help GFG avert bankruptcy and avoid an emergency sale of assets, according to people familiar with the matter who did not want to be named as the talks are private. Gupta is separately seeking new funding to replace Greensill’s loans, they said.

The abrupt collapse of Lex Greensill’s business has closed the Credit Suisse Group AG funds and the Japanese SoftBank Group Corp. forced to write off their $ 1.5 billion investment in the supply chain finance company. Now GFG is in danger of being brought to its knees as governments from London to Paris monitor the threat to 35,000 jobs at a company that ranges from steel to renewables.

In the UK, Prime Minister Boris Johnson’s government is in constant contact with Gupta’s steel division about the impact on UK factories and jobs, said a person familiar with the matter. GFG employs around 5,500 people across the UK, including an aluminum smelter in Scotland. In France, Finance Minister Bruno Le Maire said the government would support GFG workers and their industrial sites if Greensill’s troubles put them at risk.

GFG “was in default of failing to meet its obligations” after Greensill stopped lending to the group in early March, according to court files. Greensill’s involvement with the metals group was $ 5 billion, one of the people said.

British unions met with GFG executives on Tuesday over fear of job losses in Gupta’s empire. The Indian-born former commodities trader was previously referred to as the “savior of steel” because of his inclination to buy unloved mills and smelters. GFG, a loose group of companies that he owns, spans 30 countries. “Although Greensill’s difficulties have created a difficult situation, we have sufficient funds to meet our current needs,” GFG said in an email.

Negotiating debt relief shouldn’t lead to a deal, people said. Grant Thornton’s partners were named joint administrators of Greensill on Monday. A spokesman for Grant Thornton declined to comment.

The collapse of Lex Greensill’s company of the same name has cast a shadow over Gupta’s business, which has been heavily dependent on its funding for a $ 6 billion acquisition tour over five years. In Monday’s court filing, Greensill said his largest customer by value was in “serious financial trouble” and warned last month that without his funding he was facing bankruptcy.

The news that Greensill has petitioned the administration is “extremely worrying for the unions and workforce,” said a spokesman for the UK’s National Trade Union Steel Coordinating Committee. “The government needs to take an active role in enabling a comprehensive solution.”

The Australian Workers’ Union has met regularly with management at GFG’s Whyalla steel mill in South Australia, National Secretary Daniel Walton said in a statement emailed.

GFG acquired Whyalla in 2017 with a bold plan to ramp up production and invest in renewable energy to reduce energy costs. The steel mills are now profitable and the global outlook for steel demand is good, said Walton.

A spokeswoman for Australian Industry Secretary Karen Andrews said the government is “monitoring the situation” but declined to comment on the potential impact of Greensill’s troubles.

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