GFG Alliance asks ministers for £170m bailout to avoid collapse
Sanjev Gupta’s steel empire has asked the government for an emergency bailout of as much as £170 to avert collapse.
GFG Alliance wrote to the government this week to request emergency funding as it grapples with financing following Greensill’s collapse, according to Sky News.
Greensill, which specialises in supply chain finance, was among GFG’s biggest lenders but its insolvency has left the company scrambling for cash.
There has been speculation that the government is bracing for the collapse of the company, which is Britain’s third largest steel firm, by drawing up plans to run Liberty Steel using public money.
The support would be akin to support granted to British Steel in 2019, which was forced into compulsory liquidation and passed to the Official Receiver. It was then sold to Chinese steel group Jingye last March but the intervention cost taxpayers nearly £600m.
Concerns are rising over Liberty, which employs 5,000 workers across 12 sites in the UK.
One source told Sky News that GFG acknowledged that its approach to the government represented “a last roll of the dice”.
The letter to BEIS reportedly said GFG required funding of up to £170m to cover working capital and operating losses but the negotiation could focus on a higher or lower figure.
Business secretary Kwasi Kwarteng has reportedly met with Liberty executives several times to discuss the crisis as concerns grow that GFG could soon collapse into administration.
A government spokesperson said: “The Government is closely monitoring developments around Liberty Steel and continues to engage closely with the company, the broader UK steel industry and trade unions.”
”The Government has supported the steel sector extensively, including providing over £500m in recent years to help with the costs of energy. Our unprecedented package of COVID support is still available to the sector to protect jobs and ensure that producers have the right support during this challenging time.”
GFG Alliance declined to comment but recently said the company “as a whole is operationally strong”.