Gupta Plans to Sell U.K. Plants Amid Credit Suisse Debt Talks

GFG Alliance is putting seven of its U.K. plants up for sale as it seeks to reach an agreement with Credit Suisse Group AG to stave off insolvencies of some of its units.

Owner Sanjeev Gupta made “significant progress” in weekend talks with the Swiss lender’s asset-management arm to resolve GFG’s exposure with Credit Suisse, the metals group said in an emailed statement Monday.

GFG has been seeking to raise new financing to replace some of the $5 billion of loans provided by Greensill Capital since the London-based financial firm collapsed in March. Meanwhile, Credit Suisse, which is trying to recover claims on loans it had made via Greensill, has sought to wind up some of GFG’s British and Australian businesses in court.

As part of a restructuring plan for its U.K. operations, GFG will look to sell its Liberty Steel aerospace and special alloys business in Stocksbridge, which supplies customers including Rolls-Royce Holdings Plc, as well as the Aluminium Technologies and Pressing Solutions units. Alvarez & Marsal will run the sale processes, according to the statement.

Liberty also said it’s in “advanced discussions” with Credit Suisse to reach a debt standstill for its Australian primary metals unit ahead of a refinancing that would repay the Swiss bank in full.

A Credit Suisse spokesman declined to comment.

GFG had been in negotiations to obtain new funding from investment fund White Oak Global Advisors, which said last week it was continuing efforts to refinance the Australian primary metals business “subject to financial due diligence and acceptable governance.”

U.K Plants

Gupta’s British plants that are being put up for sale employ about 1,500 people. The fate of the plants has been closely watched by politicians, suppliers and unions since funding to GFG dried up earlier this year.

“Stocksbridge and its downstream plants are strategically important businesses vital to our country’s defense, energy and aerospace sectors,” union representatives for the National Trade Union Steel Coordinating Committee said in a statement. “The trade unions will hold Sanjeev Gupta to his promise that none of our steel plants will close on his watch.”

U.K. Plants For SaleEmployees
Liberty Steel - Stocksbridge762
Liberty Steel - Brinsworth101
Performance Steels - West Bromwich167
Aluminium Technologies - Coventry129
Aluminium Technologies - Kidderminster55
Aluminium Technologies - Witham66
Liberty Pressing Solutions - Coventry225
Source: GFG Alliance

Gupta bought his first steel mill in the U.K. eight years ago, and is now the country’s third-biggest producer with a dozen sites. Many of his Liberty Steel plants provide products tailored to local manufacturers, potentially leaving customers exposed if they shut down, especially given Brexit trade upheaval.

A spokesperson for aerospace trade body ADS said the industry was monitoring the situation and that “a successful sale that secures continuity of supply would be a positive outcome.”

Pressure on Gupta was dialed up further this month after the U.K.’s Serious Fraud Office said it was investigating GFG for possible fraud and money laundering, including its Greensill financing.

The Bank of England revealed on Monday that it had notified the National Crime Agency and the SFO more than a year ago about its concerns over Wyelands Bank, Gupta’s banking arm in the U.K.

Andrew Bailey, governor of the Bank of England, told a parliamentary committee that the banking regulator had first identified problems in late 2018 or early 2019 relating to “a lack of transparency particularly around connected lending in the context of the ultimate beneficial owner, who was Mr. Gupta.”

He said that “further concerns” came to light in October-November 2019, triggering a new phase of investigations and leading to the regulator setting out its concerns to the SFO in February 2020.

A spokesman for GFG didn’t immediately respond to a request for comment.

Wyelands Bank said this month it would be wound up if it can’t find a buyer.

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