- Friday, December 09, 2022
By: Pramod Thomas
THE likely collapse of Australian finance house Greensill is trouble for Indian-born British businessman Sanjeev Gupta as he owes around £4 billion to it and some of the world’s biggest lenders, reported The Times.
Reports said that Gupta’s acquisition spree has been fuelled by Greensill’s supply chain finance funds, enabling him to buy up steel and aluminium factories from Scotland to Australia.
That included providing more than £1.9 billion of funds for him to buy a clutch of European steelworks from Arcelor in 2019.
Greensill provided Gupta with huge sums to buy assets from companies including Tata, Arcelor Mittal and Rio via invoice discounting, where it advanced cash to Gupta and took on its customers’ IOUs.
According to The Times, Gupta has stopped paying Greensill up to £100 million a day since Monday (1), implying up to £500m of cash has been withheld just last week.
Besides, GFG Alliance owes to lenders including JP Morgan, Blackrock, Bank of America, mining giant Rio Tinto and bondholders totals more than £800m.
Greensill was thrown into turmoil when Credit Suisse suspended its $10 billion (£7.2 billion) supply chain fund last week.
The company was founded by Australian banker Lex Greensill and advised by former UK prime minister David Cameron. Grant Thornton is lined up to handle the imminent administration of the company, which is backed by Japan’s Softbank.
Meanwhile, GFG claimed that its operations are running normally and the company is benefitting from strong market conditions generating ‘robust sales and cash flows’.
“Our operational efficiency programme has improved profitability and we are making progress in our discussions with financial institutions that can help diversify our funding,” it said.
But, unions are on alert over GFG’s health. Business secretary Kwasi Kwarteng met steel bosses last week, including a Liberty executive.
Reports said that former city minister Lord Myners was offered a seat on the board of Greensill and lucrative share options despite being a vocal critic of the company. But he turned down the offer.
In 2019, Myners called on the city watchdog to formally investigate the GAM Greensill Supply Chain Finance fund amid concerns about assets in the fund linked to Sanjeev Gupta, the steel tycoon.
Gupta is trying to raise rescue funds from Glencore by forward selling aluminium to the metals giant, after the tycoon flew to Switzerland last week for talks with Glencore executives, The Times reported.
GFG Alliance employs about 35,000 people, 5,000 in the UK.
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