Sanjeev Gupta seeks £170m government bailout

Sanjeev Gupta has asked the government for an emergency bailout of £170m to prevent his conglomerate GFG Alliance from collapsing, according to people familiar with the situation. 

GFG, which runs smelters, mines and power stations around the world, owes billions of dollars and is under intense pressure to shore up its finances following the collapse of its main lender, Greensill Capital.

The metals tycoon wrote to ministers at the department of business this week to request the funding, according to people familiar with the matter.

People close to the situation played down the likelihood of ministers agreeing to a straight bailout, however. “The appetite to save Gupta does not exist,” said one person. 

There are concerns within the government about the governance and opaque structures at Liberty Steel, GFG’s steelmaking business which is the UK’s third-largest producer of the metal, and concerns about whether taxpayer funding would remain in the UK if help were to be provided.

GFG declined to comment. The request was first reported by Sky News.

Meanwhile, advisers to the metal tycoon’s sprawling business empire have been working on a private-sector restructuring plan, dubbed “Project Battery”, which has sought to determine the equity value of its assets. 

The group’s UK, European and Australian assets have been given a net equity value of just $123m, say preliminary estimates drawn up by advisers.

According to people aware of the matter and documents seen by the Financial Times, the “Project Battery” estimates put the group’s equity value at $123m after debts of more than $3.5bn are taken into account, although this excludes its manufacturing operations in the US and India. People familiar with the matter stressed these were preliminary estimates as advisers seek to understand the exact state of GFG’s assets.

The group’s most valuable asset is its Australian division InfraBuild, which is given an equity value of more than $2bn. However, GFG’s eastern European steel operations, which include large plants in Romania and the Czech Republic, are ascribed a negative equity value of $1.6bn. 

GFG said: “These are not company numbers and we therefore do not recognise them.”

GFG’s British steel facilities, which employ about 3,000 people across 12 locations across the country including steel plants in Yorkshire and Wales, have a negative equity value of more than $800m, said the people.

The FT disclosed last week that ministers were drawing up contingency plans in the event of the group collapsing, including using public funds to maintain production while seeking a buyer. The UK Treasury supported British Steel in the same way in 2019. 

A government spokesperson said it was closely monitoring developments around Liberty Steel and continued to engage closely with the company, the broader UK steel industry and trade unions. 

“The government has supported the steel sector extensively, including providing over £500m in recent years to help with the costs of energy. Our unprecedented package of Covid support is still available to the sector to protect jobs and ensure that producers have the right support during this challenging time.” 

A former commodities trader, Gupta embarked on a rapid series of acquisitions of struggling metal factories over the past five years to build a sprawling network of industrial enterprises with $20bn in turnover and 35,000 employees.

However, the privately owned collection of dozens of businesses has often relied on opaque and complex forms of funding, which are often more expensive than conventional corporate debt.

This is threatening to unravel following the insolvency of Greensill, a supply-chain finance group that provided funds based on customer bills and to which GFG owes $5bn, according to court documents. The same documents revealed that GFG had said in a letter on February 7 that it would collapse if Greensill stopped providing it with working capital. 

Also on Friday, David Cameron was cleared over allegations that he had breached lobbying rules by failing to disclose his activities in relation to Greensill. The FT revealed last week that the former prime minister had unsuccessfully lobbied senior figures in the Treasury and Downing Street to change Covid-19 loan schemes to benefit his employers at Greensill. 

The Registrar of Consultant Lobbyists said on Friday that Cameron had not breached its rules by failing to disclose his activities on the register, which he set up seven years ago. That is because the register only applies to third-party lobbying firms and not in-house lobbyists like Cameron.