ArcelorMittal to Demand Upfront Cash to Supply Gupta Steel Mills
(Bloomberg) -- ArcelorMittal SA will ask for cash up front to supply Sanjeev Gupta’s GFG Alliance with steel amid fears about the group’s financial situation.
The company will change its payment terms for shipments to the finishing plants Gupta bought from it in 2019, according to a person familiar with the matter. It’s likely to put further stress on GFG’s cash flow as it tries to find alternative financing after the collapse of its biggest lender, Greensill Capital.
It follows a brief suspension of deliveries by the steel giant to some of GFG’s plants, the person said. A spokesperson for the company’s unit, Liberty Steel, said there was a “temporary issue” with one of its suppliers for some of its sites, but added it had been “successfully concluded using our normal commercial dispute procedures.”
ArcelorMittal is constructively working with Liberty Steel “to ensure continuity of the contract,” it said in a statement. A spokesperson for GFG said the company wouldn’t comment on commercial arrangements.
Greensill’s collapse has raised questions about the financial health of Gupta’s businesses, which were its biggest customer. GFG told Greensill in February that it would be insolvent without its funding, the financing firm said in a filing. Worker unions have since raised concerns over the security of 35,000 jobs across Gupta’s sprawling empire that has operations in 30 countries.
GFG has hired PJT Partners Inc. and Alvarez & Marsal Inc. to help it secure new financing, Bloomberg reported on Wednesday. Their first task will be to secure a debt standstill on the $5 billion GFG owes Greensill and other funds that bought its financial products, a person familiar with the matter said this week.
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