GREENSILL Capital, the biggest lender to crisis-ridden steel magnate Sanjeev Gupta’s GFG Alliance, collapsed into administration yesterday. It has gone bust, and 5,000 steel jobs at Gupta’s Liberty Steel are now under the most severe threat.
Gupta is now holding crisis talks with trade unions including Unite and the Community Union.
The ‘specialist lender’ Greensill fell into ‘severe financial distress’ after losing over £7.2 billion in funds from Credit Suisse!
Gupta will be holding crisis talks with unions today as his ‘empire’ teeters on the brink of collapse. It is understood he is demanding big wage cuts and other major concessions from the trade unions to give ‘his’ steel plants a chance of survival.
Steel union Community showed willing yesterday saying: ‘We are ready to work with all stakeholders to protect jobs and take confidence from the fact this is a vital strategic business with a world-class workforce, producing the best steel money can buy.’
The emergency summit with the unions, which had been scheduled before the news of the Greensill collapse, comes as bidders are reported to be circling Gupta’s plants – amid speculation he will resort to a ‘fire sale’ of plants and burn thousands of jobs.
One Gupta site in particular, a factory that makes aerospace parts in Stocksbridge, South Yorkshire, could become the first victim after the pandemic hammered demand for its products.
With the downturn in the aerospace industry, it is not clear if any buyers would be keen to snap up the Stocksbridge plant, which employs 762 people. Unless the trade unions act it will certainly be closed.
Gupta’s GFG Alliance is a loose collection of companies that includes Liberty Steel – Britain’s third-largest steel maker with 3,000 workers at 12 sites.
Gupta became known as the ‘saviour of UK steel’ after a spending spree that saw him buy up plants including in Rotherham, Stocksbridge, Newport, Motherwell and Hartlepool.
But the Indian-born British tycoon also went on a global acquisition binge, buying steel and aluminium factories in Australia and the US. The GFG Alliance has racked up an estimated £4 billion of debt to lenders, including £3 billion to Greensill alone.
Unions are said to be desperate to find out how the collapse of Greensill will hit Liberty Steel’s UK operations, and have been frustrated by the lack of transparency.
A spokesperson for accountants Grant Thornton said its insolvency practitioners Chris Laverty, Trevor O’Sullivan and Will Stagg had already been appointed as joint administrators of Greensill Capital and Greensill Capital Management Company.
‘The joint administrators are in continued discussion with an interested party in relation to the purchase of certain Greensill Capital assets.’
Tory Business Secretary Kwasi Kwarteng held an emergency meeting on Sunday with the chief executive of Liberty Steel UK, John Ferriman. They discussed contingency plans in the event that Greensill went bust. The options did not include nationalisation. Kwarteng also chaired a meeting of UK steel executives on Friday at which the future of Liberty was brought up,
Liberty Steel is the UK’s third-largest steelmaker, employing 3,000 people at 12 sites. Another 2,000 people in engineering businesses within the group are also involved. Many of Liberty Steel’s assets were part of Tata Steel’s UK business until they changed hands for £100m in 2017.
Greensill Capital, run by former investment banker Lex Greensill, counts former Prime Minister David Cameron among its paid advisers.
The trade union leaders must be forced off their knees to defend the thousands of steel jobs that are under threat. The factories must be occupied and the TUC must be made to call a general strike to nationalise the steel industry and put it under workers’ management.
This will mean bringing down the Tories and bringing in a workers’ government and socialism.