Bluestone Offers Credit Suisse $300 Million in Greensill Row
(Bloomberg) -- Bluestone Resources is offering $300 million and half the value of its business to repay loans made by Greensill Capital that ended up in Credit Suisse Group AG’s now-frozen supply chain finance funds.
The U.S.-based mining company, which is owned by the family of West Virginia Governor Jim Justice II, was loaned around $850 million by Greensill Capital, and much of that debt ended up in about $10 billion of funds run by Credit Suisse. Bluestone recently proposed to pay $300 million in cash by refinancing part of the Greensill debt and promised half the proceeds of a future sale of the mining firm, according to a person familiar with the matter.
The Wall Street Journal reported the news earlier on Monday.
The Bluestone debt is one of three problematic buckets of loans made by Greensill that the Credit Suisse funds are struggling to recover, with financings for Sanjeev Gupta’s GFG Alliance and failed builder Katerra Inc. making up the rest of some $3 billion in illiquid assets. The Zurich-based bank is planning to distribute about $400 million to investors this week in the fifth installment since it froze the funds, taking the total paid out to $6.3 billion.
“Credit Suisse Asset Management is doing everything we can to maximize recovery for our fund investors,” Credit Suisse said in an emailed statement. “If outstanding debtors put proposals to us, we will of course look at them.”
The collapse of Greensill marked an early reversal in Chief Executive Officer Thomas Gottstein’s tenure, before the bank was hit by the even bigger meltdown of Archegos Capital. Credit Suisse is still conducting an investigation of what happened with the Greensill-linked funds and is due to announce its findings soon.
The bank marketed the popular supply-chain finance funds as among the safest investments it offered, because the loans they held were backed by invoices usually paid in a matter of weeks. But as the funds grew into a $10 billion strategy, they strayed from that pitch and much of the money was lent through Greensill against expected future invoices, for sales that were merely predicted.
Bluestone is suing Greensill Capital and its founder Lex Greensill in a New York court. In the lawsuit, Bluestone claims that it was unaware of the London-based lender’s relationship with Credit Suisse before Greensill collapsed in March. Some Justice family members, including the governor, made personal guarantees on some of the loans.
“I think it’s pretty accurate,” Jim Justice said at a press briefing for local journalists on Monday, in response to the Journal story. “We got the rug just jerked right out from underneath us with the Greensill folks.”
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