Steel magnate Sanjeev Gupta concedes GFG too dependent on collapsed lender Greensill
Whyalla steelworks owner Sanjeev Gupta has said the collapse of major lender Greensill precipitated the "most difficult month" of his life, as the billionaire's financial woes continued.
Key points:
- Greensill's collapse has caused major uncertainty around GFG and the Whyalla steelworks
- In a podcast to employees, Mr Gupta conceded his company had been slow to diversify away from the lender
- However, he talked up the company's prospects, saying he was intent on recovery
Greensill Capital was one of the major lender's to Mr Gupta's GFG Alliance, but has been placed in the hands of administrators Grant Thornton after global wealth manager Credit Suisse froze $US10 billion worth of investment funds that it relied on.
The chain of events left businesses across the globe in the lurch, including GFG Alliance and its Whyalla steelworks, as well as the plant's more than 1,200 workers.
In a more recent setback for the billionaire, the British government has reportedly turned down GFG's request for a $307 million bailout for Liberty Steel UK, another arm of Mr Gupta's empire.
Mr Gupta has kept a low profile in recent months, doing little in the way of media interviews and remaining coy about his company's fortunes.
In a podcast intended for his employees but publicly released by his company, Mr Gupta insisted there were no plans to sell off parts of the "core" business.
But he conceded that his steel operations had been too heavily dependent on Greensill for funding.
"We should have diversified away from Greensill sooner," he said.
"That's part of the reason why we consolidated the group, set up a board, set up non-exec directors, set up all the governance and all the transparency and all the structure which you need to go and access normal, traditional financing.
"That was in train. Could we have done it sooner? Probably."
He said moving away from the crippled lender would be a "challenge", but was confident about rising to it.
The Greensill collapse has coincided with other challenges for Mr Gupta, with coronavirus taking a professional as well as personal toll.
While the pandemic has driven down demand for steel, Mr Gupta remains in Dubai after contracting COVID-19 during a Christmas trip with his family.
"It's been the most difficult month of my life without any exception. You know, I really care about my business," he said.
"I'm totally committed to … come out of this, and actually come out stronger.
"Most of the businesses which are within GFG have seen hardship before, and they have come through that with their own perseverance and their own grit and their willingness not to give up."
Mr Gupta also responded to reports Greensill and Liberty Steel had accessed about $720 million from the UK Government's Coronavirus Large Business Interruption Loan Scheme — despite the scheme capping loans at about $90 million.
"As far as I know, Greensill took extensive legal advice on the rules applicable … and they followed all the rules," he said.
"What I can say for certain is that GFG did not break any rules."
Mr Gupta said there were "no plans to sell any of our core businesses", and said GFG was now taking "strong, prudent steps" towards recovery.
"Which could include measures such as, you know, getting some customers to pay early," he said.
"Environmentally, our model is the right model, green steel is the way forward and everybody is now accepting that."