Gupta parties as GFG’s troubles pile up
As revelers enjoyed the last days of summer on the Greek resort island of Mykonos last weekend, a distinctive blue and silver helicopter purred above.
The passengers of the private plane sat comfortably in its white leather seats as they approached their destination: the lavish celebration of Sanjeev Gupta’s 50th birthday. While few spectators relaxing poolside at the luxury hotels below are likely to have recognized the company logo on the tail, the call sign engraved under the rotor blades of the l helicopter – “M-INES” – offered a clue to the heavy industry that made the owner’s fortune.
Thousands of steelworkers employed by Gupta companies around the world face an uncertain future following the collapse of its main lender Greensill Capital. But while the metals mogul has not set foot on British soil since the Serious Fraud Office launched an investigation into the businesses of his Gupta Family Group Alliance, he is still living the high life, enjoying regular trips to Europe since his birth. new base in Dubai.
But some members of his entourage are privately wondering how long the party can last.
GFG Alliance has over $ 5 billion in outstanding debt, the majority coming from Greensill, which now needs to be refinanced. A particularly stubborn creditor has opened a number of legal battles in the UK and said on Friday it had taken control of the prized Gupta aluminum smelter in France. Meanwhile, the surge in prices of key commodities that brought relief to GFG earlier this year is cooling off.
Still, those involved in the recent negotiations with Gupta say he seems unfazed, channeling the nerve that has helped him assemble a collection of unloved metal factories and create a sprawling conglomerate with 35,000 employees.
“He’s really overconfident right now,” said a person involved in the refinancing talks, who added that winning the commodity trading center Glencore’s pledge of funding earlier this year had particularly boosted his morale. “Cocky is probably the right word. “
Sun, sand and steel
Gupta, who turned 50 on Monday, invited a group of close friends, key lieutenants and business partners to a multi-day celebration in Mykonos.
The itinerary included parties at exclusive beach bars and five-star resorts, according to people familiar with the event, as well as a day trip to the nearby uninhabited island of Rineia. Gupta’s helicopter transported guests to and from the festivities.
“Sanjeev Gupta’s parents welcomed family and a small number of friends and associates to mark their son’s 50th birthday [last] months in Mykonos, ”said GFG. “The event was sponsored by Sanjeev’s father to mark a milestone.”
Meanwhile, workers at Liberty Steel factories in Gupta, Yorkshire are increasingly frustrated by the lack of progress on new funding. Most of the workers at its two main factories, in Rotherham and Stocksbridge, have been on leave in recent months, with intermittent production due to funding difficulties. Liberty Steel is Britain’s third-largest steelmaker and employs around 3,000 people across the country.
Hopes are now based on a breakthrough by the middle of the month. The company recently told employees in a memo that “activities to fund a steelmaking restart in mid-October remain ongoing.” As part of a deal with the unions, GFG has pledged to pay inactive workers 80 percent of their wages for the month.
“Clearly, we need a financial solution to implement,” said a spokesperson for the Steelworkers Union Community. “We hold Sanjeev Gupta accountable for his promises to protect our jobs and the future of our businesses.”
GFG told UK workers that an agreement to refinance the group’s Australian operations would pave the way for further funding in the UK. But while Gupta said last month that the deal to refinance Greensill’s debt related to steel mills and mines in Australia was “virtually done,” negotiations with potential lender White Oak Global Advisors have since been complicated by a recent fall in iron ore prices.
A person familiar with GFG’s position pointed out that the company has other options to finance the business and is still in the process of securing a refinancing deal in Australia. They added that an agreement to finance the British company is slated for mid-October.
On Tuesday, rating agency Moody’s downgraded InfraBuild – GFG’s Australian steel recycling business – deeper into scrap, citing its “growing refinancing risk.”
The delays also test the patience of Credit Suisse, whose clients owe GFG around $ 1.2 billion, after the Swiss bank invested their money in complex products organized by Greensill that left them exposed to GFG.
Missing in action
As a group of trusted advisers made the pilgrimage to Mykonos, several key figures were conspicuous by their absence.
While Glencore recently offered financial support for Gupta’s aluminum business, none of its traders attended the event, according to people familiar with the details.
Jay Hambro was also absent, the descendant of a London banking dynasty who until recently was Gupta’s chief investment officer and right-hand man, before a rift broke out between the two.
Glencore and Hambro are both involved in a fight for control over key parts of Gupta’s aluminum business with US private equity firm American Industrial Partners.
AIP set its sights on GFG’s factories in France and Belgium earlier this year, buying out debt raised against the companies from the original lenders, including BlackRock and Barclays.
Hambro negotiated a deal to sell the assets to AIP, which would have forced him to leave the ship for the new owner, creating tensions with Gupta. Glencore then stepped in with a loan offer that would allow Gupta to retain control of the aluminum business, while giving Glencore access to the metal for sale through its extensive trading activities.
AIP responded by filing a lawsuit that placed two UK holding companies that hold the French and Belgian aluminum businesses under administration in July. He then filed a new lawsuit in the High Court in London last month, alleging that the French company owed AIP immediate repayment of more than $ 145 million in debt due to its parent company going into receivership. British.
The AIP declined to comment.
Although Gupta has not visited its UK factories for some time, it is returning to some of its European businesses, including GFG’s vast steel plants in Romania, as Covid restrictions have eased.
“I’m not a chairman of a board who sits down and never sees his plants. I love going to my factories and I go there regularly, ”Gupta said in August, during an internal company podcast. “There are no red carpets, it’s a normal activity for me.”
Additional reporting by Neil Hume and Owen Walker