Greensill called in insolvency experts in late December weeks after eyeing potential IPO

In mid-December, Lex Greensill was talking up a multi-billion dollar float of his eponymous finance company. But within two weeks, his thoughts had turned to insolvency.

Greensill Bank offices in Bremen, Germany. Picture: Bloomberg

Greensill Capital called in Grant Thornton as early as December last year for talks over its possible insolvency, only weeks after its founder was talking up the likely float of the financial services darling.

In mid-December Lex Greensill was talking up plans to float his eponymous company, saying he was “carefully considering” a multi-billion dollar sharemarket listing of his eponymous finance company.

But within two weeks – despite having embarked on a pre-IPO capital raising worth up to $US600m ($800m) that could have valued the company at $US7bn – Greensill Capital had called in Grant Thornton for restructuring advice, and was floating the possibility of insolvency.

The capital raising did not proceed.

Lex Greensill of Greensill Capital in London. Picture: Annabel Moeller

But administrator Matt Byrnes, of Grant Thornton, said in documents filed with the corporate regulator on Thursday that it wasn’t until March 1 that “it became evident” that Greensill was unable to source additional funding to support its UK operations.

Mr Byrnes said the accounting firm’s UK arm was engaged in late December to assist Greensill – a little over two months before the group collapsed this week.

He said Grant Thornton UK was called to “assist with contingency planning which included conducting supporting analysis in relation to the options and financial outcomes available to the companies as they sought to restructure”.

Between December 31 and March 8, Grant Thortnon UK (GTUK) held eight Microsoft Teams calls with its Australian colleagues, providing “informal, high level updates … in relation to the status of the contingency planning engagement”.

“The purpose of the meetings was to allow GTAL (Grant Thornton Australia) to provide GTUK with considerations in relation to a potential insolvency of the company in Australia, which was one of the potential outcomes of the contingency planning,” Mr Byrnes said, adding Greensill didn’t pay Grant Thornton Australia to attend these calls.

“On or around March 1 2021, it became evident to the directors of the Company that additional funding anticipated by GCUK (Greensill Capital UK) was unlikely to be made available to support Greensill’s operating business in the UK,” he said.

The next day, Mr Byrnes and his colleague Philip Campbell-Wilson attended a Zoom meeting with Greensill’s board of directors “for the purposes of an introduction and to gain an understanding of the company’s financial position and the status of the Greensill Capital UK restructure only to the extent it impacted the company”.

“The duration of this meeting was approximately 30 minutes. The GTAL partners, as the subsequent administrators, were present as observers only and neither GTAL partner spoke to the meeting. No remuneration was provided in relation to our attendance at this meeting.

“Other than this single meeting, none of the administrators, nor any other partner of GTAL has had any dealings with the Directors of the Company in relation to this engagement.”

Six days later, Grant Thornton was officially appointed administrators after Greensill said in a court filing it was in “severe financial distress” and unable to repay a $140m loan to Credit Suisse, following ­“defaults” from its key customer: Sanjeev Gupta’s GFG Alliance.

It was a massive change in fortune for Mr Greensill’s bold plans for the company, which he shared with The Australian in mid December.

“Australia is so well positioned. You asked me about our plans to become a public company. It is definitely the case that Australia is in the top three that we are considering as to where we would choose as our location, in no small part because Australia’s economy has proven yet again to be just so robust through COVID, which I think is a tremendous thing,’’ Mr Greensill said at the time.

The revelation by the accounting firm also throws up new questions about Greensill’s relationship with its biggest client, Sanjeev Gupta’s GFG Alliance, which was pressing ahead with Mr Gupta’s rapid-fire global expansion plans even as Greensill’s London head-office were deep in talks with Grant Thornton over concerns about its solvency.

In January Mr Gupta was still in talks with Thyssenkrupp over the sale of the German group’s steel unit, amid reports Greensill would again be a financial backer for the acquisition, before Thyssenkrupp abruptly broke off talks in mid-February.

Sanjeev Gupta. Picture: Bloomberg

At the same time GFG was also in talks to by Alcoa’s troubled San Ciprián aluminium smelter, with the Spanish government last week demanding GFG prove it is solvent before it will approve any transfer of the asset.

And on January 4 GFG closed a deal to buy the TEMCO manganese smelters in Tasmania, owned by South32 and Anglo American, only weeks after the deal was waved through by Australia‘s Foreign Investment Review Board.

Greensill has since warned that GFG itself faces insolvency, with Mr Gupta scrambling to find alternative financial backers and Grant Thornton tasked with finding ways to recover the $US5bn said to be owed to Greensill.

A spokeswoman for the Tasmanian government said: “GFG Alliance has also reinforced its ongoing commitment to Australia” to government officials.

“Government has been briefed on this matter and the GFG Alliance has advised that it 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,” the spokeswoman said.

“Government, through the Office of the Coordinator-General, maintains an ongoing relationship with Liberty Bell Bay and will continue to work closely with the company and its owners.”