Sanjeev Gupta reached out to Treasurer Josh Frydenberg as Greensill unravelled

Sanjeev Gupta told Josh Frydenberg in March his GFG Alliance was committed to Australia and the bulk of his operations had adequate funding.

GFG Alliance head Sanjeev Gupta. Picture: AFP

Steel magnate Sanjeev Gupta told Treasurer Josh Frydenberg in March his family-backed GFG Alliance business was committed to Australia and the bulk of his operations had adequate funding for their needs, even as his key financier Greensill teetered on the brink of collapse.

However, Mr Gupta, whose business owns the Whyalla steelworks, at the time conceded the problems being faced by the Lex Greensill-backed Greensill Capital had presented “a clearly challenging situation in the short term”.

The comments by Mr Gupta were made in a letter sent to Mr Frydenberg dated March 4, 2021, and released under a Freedom of Information request. And while the multibillion-dollar collapse of Greensill Capital just a week later overtook events, it suggests that Mr Gupta was keen to keep lines of communication open with Canberra as financial stress was rising.

The Australian has previously reported that following the collapse of Greensill, Scott Morrison had been receiving briefings on the fallout and its implications on GFG and the Whyalla steelworks.

Mr Gupta’s UK-based conglomerate has been under intense pressure since the collapse of Greensill to refinance up to $US5bn ($6.5bn) of global debt issued by Greensill which was then bundled into bonds sold on to ­clients of Credit Suisse.

Just last week Mr Gupta won a six-week reprieve from the threat of liquidation of his Australian coal and steelmaking businesses at the hands of Credit Suisse, with the two sides agreeing to put aside a debt dispute to allow GFG to put the final touches on a $430m refinancing package.

Credit Suisse filed winding-up orders against Whyalla and other parts of the Liberty Primary Metals business in late April in its quest to recover money it says is owed through Mr Gupta’s complex relationship with Greensill.

But in the letter to the Treasurer, Mr Gupta attempted to dispel any sense of crisis triggered by the rapid unwinding of Greensill and the potential call on funds by Greensill’s creditors.

“GFG and its core operating divisions have adequate funding for their current needs while its refinancing plans to broaden its capital base and obtain longer term funding are progressing well,” Mr Gupta said in the letter.

He said this process had been under way for some months.

He also noted that GFG core businesses Liberty Steel Group and Alvance Aluminium Group were “operationally strong”.

“Those businesses are also benefiting from a recovery in the iron ore, steel and aluminium markets, with steel prices in Europe currently trading at 13-year highs.

“This means that the vast majority of our businesses are running at near full capacity to meet high demand and are generating positive cash flows.”

However, he conceded there were “a very small number” of operations where the situation was more challenging, but was not specific on what parts of his GFG empire they represented.

In the letter Mr Gupta said he wanted to take the opportunity “to reinforce the commitment that GFG Alliance has to Australia”.

GFG has also been seeking to sell non-core assets, putting the company’s planned Cultana Solar Farm and Playford big battery projects in South Australia on the market in early May, and was also reportedly looking to sell some of its British engineering businesses.

GFG also faces pressure on the regulatory front, with Britain’s Serious Fraud Office investigating suspect transactions at GFG.

The company has denied any wrongdoing.

Originally published as Sanjeev Gupta reached out to Treasurer Josh Frydenberg as Greensill unravelled