Morgan Stanley, ICBC Standard Look to Sell Gupta’s GFG Loan

Morgan Stanley and ICBC Standard Bank are looking to dispose of portions of a loan they made to a key unit of Sanjeev Gupta’s GFG Alliance, a sign that lenders may be losing confidence in the embattled metals group.

The two banks have started talks with potential buyers of their exposure to debt that financed GFG subsidiary Liberty Industries France’s acquisition of an aluminum smelter from Rio Tinto Plc in 2018, according to people familiar with the matter. The process is at an early stage and may not lead to a sale, they said, asking not to be identified discussing private information.

Representatives for GFG, Morgan Stanley and ICBC Standard Bank declined to comment on the transaction.

The plant at Dunkirk, northern France, is Europe’s largest aluminum smelter and one of Gupta’s main industrial assets. Commodity trader Trafigura Group participated alongside a syndicate of banks in the $350 million financing.

The Dunkirk loan is one of the few credit lines GFG companies raised from lenders other than Greensill Capital.

The demise of the trade finance firm earlier this month, which provided around $5 billion to Gupta companies, has left GFG racing to find new backers. However, a sale by lenders of their exposure to hedge funds and distressed-debt investors could complicate talks between GFG and its other creditors.

GFG is also negotiating with the French government and lenders over access to a potential loan of about 70 million euros ($82 million) through a state-backed Covid-19 relief program.

Gupta’s Aluminum Unit Seeks Support From French Government

Separately, the industrial conglomerate is being investigated by French authorities in relation to the disappearance of a loan provided by Greensill Capital to GFG-owned Liberty Aluminium Poitou, in central France, according to local media. Negotiations with the Spanish government over the takeover of a smelter in the country were put on hold recently over concerns about whether GFG’s aluminum unit had the financial strength to run the plant.

A Citigroup Inc. subsidiary filed an application to wind up a key GFG commodities-trading unit on behalf of Credit Suisse Group AG late Tuesday, a person familiar with the matter said earlier.

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