Sanjeev Gupta says ‘no steel plants will close’ on his watch
Sanjeev Gupta has pushed back at Greensill’s administrators, saying it makes no sense for them to chase $6.5bn in debts.
British industrialist Sanjeev Gupta has declared none of his steel plants — including the Whyalla steel works — will shut down under his watch, saying it makes no sense for Greensill’s administrators to chase him for the $US5bn ($6.5bn) he owes to the collapsed financier.
Mr Gupta, whose empire employs 35,000 worldwide, said he was having “positive discussions” with Greensill’s administrators from Grant Thornton, and said if they want any chance of securing a recovery for creditors, then he needs to keep his plants open and people employed.
“It makes no sense for them or any of their creditors to destroy jobs but more importantly to destroy value because that is the value that will give them their recovery,” Mr Gupta told the BBC on Friday evening (AEDT).
“So I am really confident that we will find short-term solutions through our own effort and long-term solutions through refinancing.
“None of my steel plants under my watch will be shut down.”
Furthermore, Mr Gupta said he had committed debt financing facilities with Greensill for another three years, so “according to us, these debts are not due”.
His bold comments come as a critical plank of his industrial empire is under threat as Credit Suisse seeks a winding-up order of his $US6bn metals business Liberty Commodities.
The move signals Mr Gupta may be running out of time to restructure his global empire after his biggest lender, Greensill Capital, collapsed.
But Mr Gupta said he had fielded refinancing offers following Greensill’s collapse and was personally monitoring cash conservation initiatives across his plants.
“Greensill has security of many of our assets, so that’s one of the challenges.
“Until we refinance our entire business, how we get short-term financing, which is why we have come up with structures like working capital structures, which we are discussing with several financiers.
“Overall, our global operations are profitable. We have different financing offers. We will refinance and we will support our UK business also.”
Mr Gupta’s GFG Alliance is negotiating directly with Greensill’s administrator Grant Thornton in an attempt to strike a standstill on a $US5bn debt owed to the financier’s UK arm, offering protection from creditors as he races to find alternate financing.
Credit Suisse had $10bn of funds invested in loans arranged by Greensill which included debts packaged up by businesses run by Mr Gupta.
The Swiss bank has applied to a London insolvency court for administrators to file the order regarding Liberty Commodities, with the action bought by Citibank as a trustee.
Liberty Commodities, established by Mr Gupta in 1992, trades raw materials while also structuring finance, logistics and risk management solutions.
GFG said it remained in talks over the standstill.
“GFG Alliance is in constructive discussions with Grant Thornton, Greensill’s administrators, to negotiate a consensual and amicable solution on the way forward, which is in the best interests of all stakeholders. While this takes place we will vigorously defend any legal action on the grounds that we have a three year committed facility with Greensill,” GFG said in a statement.
“This dispute will take many months to play out in the courts, and in the meantime we are working hard on taking prudent steps to manage our cash and refinance our business. Most of GFG Alliance’s businesses across its global portfolio are performing well and generating positive cash flow, supported by the operational improvements we’ve made and strong steel, aluminium and iron ore markets.”
The UK government is considering nationalising parts of Sanjeev Gupta’s steel empire after it rejected the British industrialist’s plea for a £170m ($307m) rescue package, while the Morrison government refuses to speculate on the health of Mr Gupta’s finances.
Mr Gupta defended his reliance on Greensill debt this week, arguing traditional forms of finance were not available when he started his acquisition spree.
“Greensill came as a breath of fresh air because they believed in our vision and model. They had innovative ways of raising finance and supported us all the way through. They had been one of our main financiers,” Mr Gupta said in a podcast this week.
“But the important point to remember is we were basically often sometimes called the world’s largest industrial start-up. These businesses were either done or about to be done in terms of going bust. There was no normal or traditional funding available so Greensill came as a godsend in terms of supporting the restart and regrowth of these businesses.”
However, he also conceded regrets over not fulfilling a long-held pledge to improve transparency over parts of his global empire.
“We chose a global auditor. We started basically doing the consolidation of all these companies around the world in all these continents and we did that last year, and this year we were going to basically race to our second consolidated audit, then we were going to go to financial markets to look at traditional, normal funding sources and diversify away from Greensill,” Mr Gupta said.
“That was a work in progress but unfortunately Greensill collapsed and this is something that has definitely been a great challenge and we are managing the situation.”