Firm, propiedad de Sanjeev Gupta, was refused £170m government bailout, but unions urge nationalisation
Liberty Steel UK, owned by tycoon Sanjeev Gupta, said on Monday it planned to restart steelmaking next week as it continued to seek new funding after its main backer, Greensill Capital, went into insolvency.
Its parent company, Alianza GFG, added in a statement it was in “constructive discussions” with the UK government about potential assistance.
The government has already rejected appeals from GFG for a £170m emergency loan, but is seeking ways to protect 3,000 British workers and the critical steel industry.
Unions are preparing to meet ministers on Monday afternoon to urge them to take the UK business into public ownership.
GFG has been seeking alternative sources of funding to keep the business afloat, but has been left stricken by the collapse of Greensill Capital.
Meanwhile Gupta has said the past month was the most difficult of his life. In a special podcast sent to all GFG Alliance staff, he said he was “holding up”. He would not confirm the extent of GFG’s debts but said they were “substantial … many billions”.
Describing his global steel business as the “largest industrial startup”, he said that its dependence on Greensill was because it had not been able to access “normal, traditional financing”.
Gupta said that GFG had been in the process of diversifying its global funding away from Greensill. “The intention was to move our steel business away as well … we now have to complete that journey.”
He did not answer questions on what the crisis would mean for GFG’s UK workforce. Gupta said that the UK steel industry “has been in a difficult place for a long time”, a situation worsened by Brexit, the downturn in diesel car manufacturing, and Covid-19.
The GFG owner is in Dubai, after contracting Covid earlier in the year, but said was a “small blessing” to be able to speak to Australia and the US from there during the firm’s travails.
Reports had highlighted the renovations of his £42m mansion in Belgravia at a time when GFG was seeking £170m in taxpayer support. Gupta said it had been “painful” for his family, agregando: “We decided to come back home – London is my home … we searched for a family house.”
The home is another deal he now rues: having exchanged on the central London property just before the pandemic hit, he said he wouldn’t have bought it now. Él agregó: “It’s been the most difficult month of my life … I really care about my business, my family, my employees, I worry about them and am totally committed to come out of this much stronger.”
The UK government refused the loan amid concern over GFG’s opaque corporate structure and whether UK taxpayer money could end up bailing out overseas businesses. GFG Alliance employs about 35,000 people around the world.
Kwasi Kwarteng, the business secretary, will meet the GMB, Unite and Community unions on Monday afternoon. He has previously said the government was “looking at all options to see what we can do” to secure the future of Liberty Steel when it goes into administration.
Unions have urged nationalisation. Ross Murdoch, GMB’s national officer, dicho: “Now that the government has stated it will not provide the bailout sought by Sanjeev Gupta … plan B must include all options, including taking the UK business into public ownership.”
A department for business spokesperson said: “The government is closely monitoring developments around Liberty Steel and continues to engage closely with the company, the broader UK steel industry and trade unions.”
A GFG Alliance spokesperson said: “We are in regular dialogue with our employees, unions, customers, suppliers, and governments to keep them informed and to explore ways we can work together through the current situation.”
They said that Liberty Steel was “working on solutions to provide additional working capital facilities to replace the funding gap left by Greensill” and “continues in constructive discussions with the UK government on measures to supplement these efforts and to highlight the importance of this business to the UK’s industrial supply chains.”