Concerns over steel jobs as lender Greensill appoints directors
Concerns have been raised about the future of thousands of steel workers, after Liberty Steel’s lender filed for administration.
Lawyers for Greensill Capital, which counts David Cameron among its advisers, appeared in court on Monday to appoint the directors of Grant Thornton.
The lender “fell into serious financial distress,” according to its lawyers and had no way of repaying a US $ 140 (£ 101 million) loan to Credit Suisse, the Financial Times reported.
Greensill lends money to businesses so they can pay their suppliers. One of its main clients is GFG Alliance of Sanjeev Gupta, which owns Liberty Steel.
The lender is expected to be partially purchased under a prepackage deal by Apollo Global Management, with news expected in the coming days.
However, the Apollo deal will not include Greensill’s exposure to GFG Alliance.
Mr. Gupta’s business empire employs around 5,000 people in the UK, the majority of whom work for Liberty Steel.
Often referred to as the ‘savior of steel’, the businessman seized a series of production sites across the UK which were under pressure from cheap foreign competition.
However, GFG itself came under pressure and relied on Greensill for around five billion dollars (£ 3.6 billion) in funding used to pay its suppliers.
A spokesperson for GFG Alliance said: “Our operations are proceeding smoothly and our core businesses continue to benefit from favorable market conditions generating strong sales and cash flow.
“Our operational efficiency program has improved profitability and we are making progress in our discussions with financial institutions that can help us diversify our funding. We keep our employees informed and will provide further updates as we deliver our plans. “
Shadow Minister of Labor for Business and Consumers Lucy Powell said: “This is a situation of deep concern and a time of great concern for workers at Liberty Steel.”
She added: “It is vital that the government acts with the urgency required and does not wash its hands of the situation.
“As we argued during the pandemic, the government should do more to support UK steel and UK manufacturers who are their customers.
“Instead, they have been ignored, without even a single reference in the budget, threatening jobs and weakening the foundations of our economy.”
A spokesperson for the union community said: “Sanjeev Gupta needs to tell us exactly what the administration means for UK Liberty companies and how he plans to protect jobs.
“The future of Liberty’s strategic steel assets must be secured and we are ready to work with all stakeholders to find a solution. “