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Bloomberg: Sanjeev Gupta’s GFG Alliance is in talks to negotiate a reprieve on its obligations to Greensill Capital and prevent a rapid collapse of the metals group which was rocked by the collapse of its largest lender.
A standstill deal with Greensill, who filed for administration on Monday, would help the metal tycoon’s group avoid insolvency and avoid an asset sale, according to people familiar with the matter, who have asked not to be named because the talks are private. Gupta is separately seeking to raise new financing to replace Greensill’s loans, they said.
Governments are carefully monitoring the fallout from the GFG. In the UK, Prime Minister Boris Johnson’s administration is in constant contact with Gupta’s steel division about the impact on UK factories and jobs, a person familiar with the matter said. In France, Finance Minister Bruno Le Maire said the government would support workers at GFG industrial sites.
Greensill stopped loaning to GFG in early March, according to court documents. Since then, GFG has “started to fail in its obligations”, according to the documents. Greensill had $ 5 billion in exposure to the metals group, one of the people said.
British unions met with GFG leaders on Tuesday amid fears of job losses in Gupta’s vast empire. The former India-born commodities trader had previously been called the “savior of steel” for his tendency to buy unloved factories and smelters. Its GFG Alliance, a group of companies it owns, spans 30 countries and employs 35,000 people.
The meeting with the unions was “productive,” GFG said in an emailed statement. “Although Greensill’s difficulties have created a difficult situation, we have adequate funding for our current needs,” he said, adding that attempts to secure alternative funding “will take some time to develop. to organise”.
Finance Debt reprieve negotiations are ongoing and may not come to a deal, the people said. Grant Thornton’s partners were named joint Greensill directors on Monday.
A spokesperson for Grant Thornton declined to comment.
The collapse of Lex Greensill’s eponymous company has cast a shadow over Gupta’s business, which has relied heavily on its funding for a series of acquisitions that have seen it spend $ 6 billion in just five years. . In Monday’s court file, Greensill said its biggest client by value had fallen into “serious financial difficulty” and warned last month it was risking insolvency without its funding.
The news Greensill tabled for administration is “of great concern to unions and the workforce,” said a spokesperson for the UK’s National Trade Union Steel Coordinating Committee. “The government must play an active role in facilitating a comprehensive solution. ” – Bloomberg
Read also : India’s steel industry was heavily protected, but the 2021 budget changed that. here’s why
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