Union holds crisis talks with Sanjeev Gupta’s Australian management
Fears are growing over the fate of Sanjeev Gupta’s steel empire following the collapse of his chief lender Greensill Capital.
Fears are growing over the fate of Sanjeev Gupta’s steel empire following the collapse of his chief lender Greensill Capital, as the union holds fresh crisis talks with management across his Australian operations after he tightened credit terms for customers in Britain.
Mr Gupta is racing to refinance $US5bn ($6.45bn) worth of debt owed to Greensill as the Australian Workers Union becomes increasingly concerned about the plight of Mr Gupta’s Australian businesses, namely Whyalla’s steelworks.
The AWU sent union delegates to Whyalla and InfraBuild plants in the last week to meet with workers and held a national video call on Friday as it seeks assurances over manufacturing plants employing thousands of staff.
“We convened a national video conference with all of our steel representatives spanning the country,” the AWU’s national secretary Daniel Walton told The Australian.
“It provided an opportunity to meet with all the various management teams from different parts of the GFG business including Whyalla and InfraBuild.”
Mr Gupta’s Liberty Steel Group has tightened credit terms for customers of its Scottish operations as he desperately seeks working capital to stave off the collapse of his empire, The Times reported.
But Mr Walton said a credit tightening among Mr Gupta’s local businesses had yet to play out in Australia.
“We haven‘t seen that here. The European business is more diverse and Australia is predominantly steel, and some of the overseas operations appear to be in a more difficult operating environment than where we find ourselves in Australia.
“Our representatives said a steady stream of work is coming through both now and in terms of forward orders and there are no issues in terms of payment of wages.
“Payments are being made and products are getting out the door to customers. So things are progressing as normal, notwithstanding the financial cloud.”
Mr Gupta’s GFG Alliance hoped to secure a standstill on the Greensill debt with the financier’s administrators from Grant Thornton. But the administrators’ job has become harder after US private equity giant Apollo Global Management abandoned a deal to buy most of Greensill’s assets. Apollo’s withdrawal has ended an exclusivity arrangement it had with Grant Thornton, opening the door for other, and bigger, supply chain finance players such as Citibank and JP Morgan to potentially buy the jewells of Lex Greensill’s crown on the cheap.
Apollo’s decision to walk away comes days after talks between the two parties broke down when Taulia, Greensill’s technology partner for a number of high-profile clients, secured $US6bn in funding from a consortium led by JPMorgan to keep its platform running.
Mr Walton is expecting it may take weeks for Mr Gupta to reach a resolution in his refinancing talks.
The British executive was hailed a hero in Whyalla after he bought its steelworks and iron ore operations out of administration in 2017 for $700m.
Meanwhile, the Morrison government has warned against a carve-up of Mr Gupta’s Australian assets, with Finance Minister Simon Birmingham saying he was opposed to any break-up of assets should conditions force the industrialist into a fire sale.
Mr Gupta’s group has been negotiating a temporary repayment standstill with Greensill management, but any deal must be signed off by Grant Thornton. Grant Thornton’s UK and Australian operations are running two separate administration processes for Greensill’s Bundaberg-based parent and its British business.
A creditors’ meeting is scheduled for Friday.
