Liberty Steel faces financial issues

The UK-based GFG Alliance, which includes steel makers Liberty Steel and InfraBuild and aluminum producer Alvance in its portfolio, has been cut off by its main financial unit and is reportedly struggling to find a replacement.

UK media outlets, including the BBC, reported that London-based Greensill Capital has been one of GFG's "main sources of funding" for several years. The firm's association with GFG "prompted Swiss investment bank Credit Suisse to freeze up to £ 10 billion ($ 13.9 billion) withdrawals in collateral" between Greensill and Credit Suisse, according to an online BBC report in early March.

The media firm reports that ties between Greensill Capital and Switzerland's GAM Holding AG led to the firing of a senior GAM manager, apparently due to "allegations of poor risk management and due diligence over billions of loans to Mr. Gupta's empire."

Online news from Bloomberg said that shortly after the disclosure of GAM, the Vision Fund of Japan's SoftBank Group Corp., which previously backed Greensill Capital, “now believes that his $ 1.5 billion invested in this firm may be worth almost nothing. ".

London-based Financial Times reported that GFG and its chairman Sanjeev Gupta have approached the Canadian investment fund Brookfield Asset Management Inc. as an alternative source of funding, but the firm "broke off negotiations" with Gupta in early March, "dealing with a blow to the British industrialist's efforts to secure funding outside of his main lender, Greensill Capital."

The BBC says it has spoken to sources that indicate Greensill is "in serious financial trouble" in the meantime and that "it would not be a mistake to assume he is likely to go into administration" or bankruptcy protection.

A spokesperson for the GFG Alliance told the news organization that the firm "has sufficient funding for its current needs" and that its "refinancing plans to expand its capital base and obtain longer-term funding are progressing well."

At the end of 2020, GFG entered into negotiations to buy the steel assets of Germany's Thyssenkrupp. These negotiations ended in mid-February this year when the Financial Times quoted the chief financial officer of a German steel company as saying of the two firms: "In the end, our views on corporate value and deal structure were very different."

In Australia, GFG manages assets previously owned by OneSteel under the InfraBuild brand, which debuted at the end of 2020. The Financial Times calls these steel and scrap recycling businesses one of the “most stable assets in the empire.