Suitors circle Sanjeev Gupta’s GFG as Greensill nears collapse
Sanjeev Gupta’s GFG Alliance is said to be on the brink of a potential fire sale as embattled finance firm Greensill, its main source of funding, nears collapse.
Rivals are eyeing up key assets from GFG’s Liberty Steel arm amid expectations that Gupta could start selling off parts of his business in an attempt to raise cash, the Sunday Telegraph reported.
The Hayange steel plant in France, which produces railway tracks for European customers, is said to be high on the list of targets.
The plant was acquired by Liberty Steel in August after regulators prevented British Steel’s new Chinese owners Jingye from taking it over due to concerns about its links to Beijing.
Gupta’s steel empire has been thrown into chaos amid troubles at Greensill, the Australian finance house that is now on the brink of administration.
The British tycoon has a debt pile of roughly £4bn, of which more than £3bn is owed to Greensill, the Sunday Times reported today.
Greensill, founded by Lex Greensill and advised by former Prime Minister David Cameron, has fuelled GFG’s rapid expansion.
But the supply chain finance specialist, which is backed by Japanese conglomerate Softbank, isc preparing for insolvency amid a litany of troubles.
Credit Suisse last week said it would wind down supply chain funds worth $10bn linked to Greensill.
It said that the decision to terminate the funds was triggered by reduced availability of insurance coverage for new investments and the substantial challenges to source suitable investment.
Gupta’s GFG Alliance has stopped making repayments to Greensill amid concerns about its impending collapse.
The steel group is also said to owe more than £800m to lenders including JP Morgan, Blackrock, Bank of America and mining giant Rio Tinto.
“Our operations are running as normal and our core businesses continue to benefit from strong market conditions generating robust sales and cash flows,” a GFG spokesperson told the Sunday Times.
“Our operational efficiency programme has improved profitability and we are making progress in our discussions with financial institutions that can help diversify our funding.”