UK

Sanjeev Gupta’s GFG Alliance still owes Greensill Capital nearly £500m

Maria Ward-Brennan
Wed, 17 April 2024 

Photo credit JUSTIN TALLIS/AFP via Getty Images

The administrators for Greensill Capital are still owed around $587.2m (£472m) from Sanjeev Gupta’s GFG Alliance, it has been revealed.

Grant Thornton, the administrators for Greensill, published a report on Sunday, where it outlined how the firm is still in ongoing discussions with a number of debtors, including GFG Alliance, regarding outstanding balances owed.

Grant Thornton warned that as the firm is not able to recover the funds owned, it will “continue to consider the recovery options that are available to Greensill Capital UK under the security and guarantees granted by GFG in connections with the GFG programmes.”

“However, we are not able to provide the details of such strategies so as to not prejudice our position,” it added.

GFG Alliance was Greensill’s biggest client and it was reported at the time of the collapse that it had an exposure totalling $5bn.

A GFG Alliance spokesperson said: “Liberty Steel Group has signed a new framework agreement with its major Greensill creditors.

“The new framework comes after achieving major milestones in raising new capital including a successful US$350m bond issue through Jefferies LLC and a $350m Asset-Backed Term Loan through Blackrock and Silver Point Finance.

“Execution of the framework agreement will build on improvements made across the group since the collapse of Greensill Capital.”

Commenting on the report, Tim Symes, insolvency and asset recovery partner at leading law firm Stewarts, said: “Like any security, a guarantee to pay another company’s debts is only as good as the ability of the giver to actually pay it.”

“The GFG group of companies is complex and opaque, and so it remains to be seen whether the companies that have granted the guarantees are in fact the ones with sufficient value to be able to meet any payment demands from the administrators,” he added.

News of the amounts owed to Greensill by GFG Alliance comes after the Insolvency Service launched a director disqualification claim against Greensill’s director Lex Greensill. This move came after it was revealed that Greensill filed a lawsuit against the Department for Business and Trade over the alleged “misuse of private information”.

Greensill administrators threaten to seize Sanjeev Gupta’s assets after he fails to repay £472m


Matt Oliver
Tue, 16 April 2024 

Sanjeev Gupta's GFG reportedly owed Greensill £3.7bn at the time of its failure in 2021 - Stefan Wermuth/Reuters

Administrators for collapsed finance firm Greensill Capital have warned they could attempt to seize assets from steel magnate Sanjeev Gupta to recover $587m (£472m) in unpaid funds.

GFG Alliance, a collection of companies headed by Mr Gupta, has been targeted by the administrators having been one of Greensill’s most prolific borrowers before its collapse.

As a specialist lender that advanced cash to companies so they could pay suppliers early, Greensill was reportedly owed £3.7bn from GFG at the time of its failure in 2021.

This includes $587m owed to the UK arm of Greensill Capital, which is yet to be repaid despite long-running negotiations, according to an update published by administrators at Grant Thornton.

Talks over repayment were ongoing but if these fail then Greensill’s administrators said they would “consider recovery options that are available” under security and guarantees given by GFG for various loans.

It is common for borrowers to put up certain assets as security for loans in the event they cannot make repayments, or offer up guarantees that a third party will pay on their behalf as a last resort.

However, the administrators declined to give further details “so as not to prejudice our position”.

They added that non-binding agreements had been signed with Mr Gupta and various GFG entities since 2022 but that no debt repayments had been made as of March 7.

Another agreement regarding debt repayments was struck on March 15 this year.

A GFG spokesman said the agreement comes after the company raised new funds, although it is understood that the amount owed by Mr Gupta’s companies remains in dispute.

GFG missed a previous repayment date agreed by both sides but this was because negotiations remained ongoing, a person familiar with the discussions said.

A company spokesman refused to confirm the new deadline for GFG’s debt repayments.

Prior to its failure, Greensill was valued at $3.5bn and counted Lord Cameron, the Foreign Secretary, as an adviser.

The company filed for insolvency in 2021 after buckling under billions of dollars in debt, with its collapse accelerated by a decision from Credit Suisse to suspend £7bn of funds.

At the time of its withdrawal, Credit Suisse cited concerns over the bank’s exposure to Mr Gupta’s businesses, which had borrowed billions of pounds to fuel a rapid expansion.

Greensill subsequently lost insurance coverage for its financing and filed for insolvency.

However, the company’s close relationship with Mr Gupta’s empire has come under scrutiny amid reports it lent money to GFG companies based on speculative invoices from customers they had never done business with.

LA REVUE GAUCHE - Left Comment: Search results for GREENSILL 

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UK

Ministers map out Liberty rescue plan: Emergency move to save 5,000 jobs after steel giant calls for £170m taxpayer bailout

Sanjeev Gupta wrote to Government officials in a desperate bid to secure a £170million bailout from taxpayers

Troubles at the UK's third largest steel producer follow the collapse of its main financier Greensill Capital

Concerns are now rising that Gupta's British operations could slide into administration unless new financing can be arranged

By EMMA DUNKLEY, FINANCIAL MAIL ON SUNDAY
PUBLISHED: 28 March 2021


The Government is preparing to trigger an emergency plan to save 5,000 British jobs in the event of a collapse of Sanjeev Gupta's steel business.

Gupta, founder of Liberty Steel and its vast parent company GFG Alliance, wrote to Government officials on Thursday in a desperate bid to secure a £170million bailout from taxpayers.

Troubles at the UK's third largest steel producer follow the collapse of its main financier Greensill Capital, which counted former Prime Minister David Cameron as a paid adviser.

Plea: Sanjeev Gupta wrote to Government officials in a desperate bid to secure a £170million bailout from taxpayers

Concerns are now rising that Gupta's British operations could slide into administration unless new financing can be arranged.

Gupta's call to Ministers for help comes just months after he forked out £42million – nearly a third of the bailout request – on a house in Belgravia.

Liberty owns a dozen steel plants in Britain, including sites at Newport and Rotherham. Private equity firms are understood to be assessing parts of GFG's global empire.

In its letter to the Department for Business GFG asked for the money to cover working capital and operating losses.

But Whitehall is thought to be concerned that bailout money might be used in other parts of Gupta's global empire instead of supporting UK jobs. There are also fears the firm could then require further financial support.

Boris Johnson has taken a personal interest in the situation, industry sources said. The Government is already thrashing out emergency plans in case the situation rapidly worsens, The Mail on Sunday understands.

It is thought the preferred route would be to wait for Liberty Steel to enter compulsory liquidation, at which point the Government would step in and keep the company running until a new buyer could be found.

This would be similar to the rescue of British Steel which collapsed in May 2019. Around 3,000 jobs were saved by an intervention which cost taxpayers nearly £600 million. The Official Receiver, a state agency, took control of the firm with the backing of the Government until it was sold to Chinese metals company Jingye last March.

Another option could see the Government support administrators to find a new buyer if Liberty Steel, which is thought to comprise seven different companies, collapses.

Dame Margaret Hodge, former chairwoman of the Public Accounts Committee, said: 'You need to save the jobs, not the man.'

She said there was a lack of transparency over 'where his money has come from, where it goes', adding: 'But what you don't want to do is sacrifice the jobs.'

The union Unite said it 'is urging the Government to do everything necessary' to save Liberty, adding: 'The loss of Liberty Steel and the specialist products it manufactures for the aerospace, automotive and oil and gas sectors would have damaging consequences beyond the steel sector.'

One industry source said it would be difficult for the Government to step in without GFG Alliance first becoming insolvent, because the company is 'a sprawling beast' with huge debts. Another source said: 'It's messy, it's very, very messy.'

And with private equity firms understood to be eyeing parts of GFG, one source in the sector said: 'It's an asset-backed bet, potentially Lone Star and Cerberus [are interested].'

Cerberus declined to comment. Lone Star did not respond.

Advisers to GFG Alliance are working on a private restructuring plan called 'Project Battery'.

Liberty Steel employs 3,000 people in Britain. Another 2,000 UK jobs span other divisions of GFG Alliance including aluminium firm Alvance and renewable energy business Simec.

Liberty Steel was forced to halt production at some sites earlier this month to preserve cash. It owes Greensill an estimated £3.6 billion, according to the Financial Times.

A GFG Alliance spokesman declined to comment on the letter, but said: 'GFG Alliance as a whole is operationally strong and benefiting from strong markets in steel, aluminium and iron ore.

'While Greensill's difficulties have created a challenging situation, we have adequate funding for our current needs. Discussions to secure alternative longterm funding continue to make good progress.

'In the UK speciality steel business, where weakness in the aerospace market has cut demand for some products by 60 per cent, we have been taking specific actions to stabilise the business and improve cash flow.'

These include 'reducing steel stocks ... and working with customers to achieve terms that will bring in cash as early as possible'.

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UK

Sanjeev Gupta gearing up for war over steel empire: Liberty Steel tycoon enlists a 'barrage of lawyers' to defend business after lender's collapse

Gupta's GFG Alliance is holding emergency talks to secure new financing

Credit Suisse has petitioned a winding-up order on GFG's commodities trader

Gupta said lenders risked hurting their own interests by calling in loans

By ALEX LAWSON AND EMMA DUNKLEY, FINANCIAL MAIL ON SUNDAY

PUBLISHED: 4 April 2021

Industrial tycoon Sanjeev Gupta has drafted in a 'barrage' of lawyers to defend his steel empire as a crisis at its biggest lender threatens to engulf him.

Gupta's GFG Alliance, which owns Liberty Steel in the UK, is holding emergency talks to secure new financing and save 5,000 British jobs after the collapse of Greensill Capital.

Credit Suisse, the Swiss bank that provided $10billion in funding to Greensill, has petitioned a winding-up order on GFG's commodities trading business.

But Gupta – who last week admitted he owes billions – has delivered a pugilistic response, saying from his home in Dubai: 'We have our legal defences ready. There is a barrage of lawyers who are readying up all their guns to fight this off.'

Tough talk: Sanjeev Gupta said lenders risked hurting their own interests by calling in loans before the financing was complete

Gupta said lenders risked hurting their own interests by calling in loans before the financing was complete. He added: 'Damaging the business is not in the interest of anybody, especially not the lenders.

'What they are doing is not logical and the arguments were made to them very robustly that they are damaging their own stakeholders, their own recovery prospects.'

Supply chain finance firm Greensill, which counted former Prime Minister David Cameron as an adviser, fell into administration last month. Gupta has been scrambling to refinance the billions Liberty Steel owed Greensill.

Concerns have been raised that Gupta's sprawling empire is opaque and would be difficult to rescue in its current form.

But the Indian-born British businessman, educated at Trinity College Cambridge, said in an interview with The Weekend Australian newspaper: 'There is a lot of interest in refinancing, given the strength of our businesses and the strength of the market. But given the noise on top of that and the surrounding situation, things need to settle down and we need a little time to get that refinancing organised.'

He added: 'My UK steel initiative has always been a labour of love. The UK industry has been decimated over the last few decades. Every single plant I bought was closed or closing.'

Gupta's comments came as GFG prepares to reopen its UK steel plants this week after pausing production at some sites last month. He has publicly vowed plants will not close under his watch. 'It is my commitment to my people. I repeated that very clearly, that I would not let them down, they don't have to worry about their futures,' he said.

Gupta has pointed to a 14-year high in steel prices. But there are other pressures on the industry.


Exclusive research for The Mail on Sunday by UK Steel reveals that exports from Britain to the EU have plunged 34 per cent in the last three months, following Brexit and the introduction of new quotas.

Steel exports were just under 420,000 tons in the first quarter compared with an historic average of 630,000 tons.

Sources told this newspaper last week that the Government is ready to protect the business should it fall into insolvency, effectively ousting Gupta while a new owner is found.

Separately, it has emerged that Greensill Capital tried to tap up private equity giants for new funding last year. The firm, founded by Australian Lex Greensill in 2011, is understood to have held talks with firms including Apollo and Blackstone.

One source said Greensill was seeking new funds around the time the pandemic took hold, but the market had 'tightened up'.

But the source also said he did not feel Greensill Capital had sufficiently answered his questions over its operations and financing – and the source said his company took these responses as 'a warning signal to stay away'.

Greensill, facilitated speedy payment for suppliers – in exchange for a small fee. It came under pressure after its insurer, part of Tokio Marine, made the decision in July last year not to extend its cover. Then last month Credit Suisse froze $10billion of funds connected to Greensill.

Greensill was also on the hunt for investors last autumn to help bridge a path to a $7billion (£5billion) stock market flotation slated for the second half of this year.

Another private equity source said Greensill Capital was 'opaque' and that conversations about the capital raising were only 'very early stage'.

Greensill had also held talks this year with a subsidiary of Apollo about acquiring Greensill assets, which ultimately fell through.

Apollo, Blackstone and Greensill declined to comment.

CRIMINAL CAPITALI$M

Calls for Scottish minister to provide assurance over potential steel company meltdown

The future of Scotland’s surviving steel and aluminium plants have been thrown into doubt after the collapse of a finance firm, which also potentially exposes the Scottish Government to its massive losses after it guaranteed to underwrite a hydro-electric power station and aluminium smelter near Fort William in a deal to save the plants.

Sanjeev Gupta at the Lochaber plant.

Demands have now been made for economy secretary Fiona Hyslop to appear in Parliament to explain the the impact of Greensill Capital entering administration on the Liberty Steel businesses in Scotland.

It is understood that billionaire steel tycoon Sanjeev Gupta, who owns Liberty Steel, owes Greensill more than £3 billion.

However, he has moved to quell concerns, telling workers’ unions that his parent firm GFG Alliance was in the process of securing alternative funding and would survive the collapse of its major backer.

Mr Gupta, who was hailed as the “saviour of steel”, said some of Liberty Steel's UK operations were loss-making and this needed to be addressed.

Speaking after crisis talks with unions following specialist bank Greensill Capital going into administration, Mr Gupta said his group was taking "prudent steps" to manage cash and was seeking new funding.

The failure of Greensill has left many fearing that thousands of jobs at Liberty Steel’s assets in the UK could be at risk. These include those who work at the Lochaber aluminium smelting plant, to which the Scottish Government has provided more than £500 million of guarantees, and the steel plant in Motherwell.

It is believed Mr Gupta persuaded the Scottish Government to give a 25-year guarantee tied to the hydro-electric power station and aluminium smelter.

Using the guarantee, which committed the Scottish Government to buying the plant's electricity if the smelter shut down, finance firm Greensill issued about £575m of top-rated bonds in 2017 to Swiss fund manager GAM.

In return, Mr Gupta pledged to save 170 jobs at the smelter and create 2,000 more at a separate aluminium-wheel factory, which would make two million aluminium wheels a year by 2020.

The factory has not been built and it is understood Mr Gupta is considering opening a water bottle factory instead.

However, after administrators were appointed on Monday, Greensill said in a court filing that Mr Gupta's operations were in "financial difficulty" and defaulting on debt.

Scottish Liberal Democrat leader Willie Rennie said it was now vital that Ms Hyslop make a statement to Parliament on the future of Liberty Steel’s Scottish sites.

"The Scottish Government once again find themselves mired in murky business,” he said.

"When the Government provided guarantees in December 2016, they made big promises about a shining future for the Lochaber smelter. Now it seems that the smelter's parent firm are in trouble and Scottish taxpayers could be on the hook.

"Just as with the BiFab yards in Fife, the Scottish Government are good at handing out money to financiers and hopeless at providing high wage, highly-skilled jobs for Scottish workers.

"The economy secretary needs to come to Parliament and explain what's next for workers and taxpayers."

Scottish Conservative Highlands and Islands MSP Jamie Halcro Johnston said the news of the collapse of Greensill had come as a “complete shock” as just "a matter of weeks ago came the positive news of an expansion at Lochaber”.

"It is a vital local industry which employs almost 200 workers and it's incumbent on the SNP to explore all options to ensure the survival of this site and those in Motherwell and elsewhere in the UK,” he said. “We need to do everything possible to preserve jobs."

His colleague, Scottish Conservative finance spokesperson Murdo Fraser, said the government’s finance minister Kate Forbes needed to “provide urgent clarity, specifically in relation to how much taxpayers' money may be at risk and what is being done to address that”.

"As seen with BiFab, the ferries fiasco and other scandals, this SNP Government has a reverse Midas touch when it comes to business,” he said.

"They must explain what is going on, the terms of these agreements and do everything possible to insulate public funds from unnecessary loss."

Greensill Capital, which has funded Mt Gupta's businesses expansion, was tipped into administration last week when one of its main backers, Credit Suisse, suspended £7.2bn of investment funds.

Greensill had used that investment to fund its supply chain finance deals, which provided huge sums to Mr Gupta's business.

In a statement after a meeting with union representatives, a spokesperson for GFG said: “Sanjeev had a productive meeting with the unions to discuss the plan to make the parts of the UK businesses facing weak market conditions more financially sustainable and address the disruption caused by the situation at Greensill.

“Liberty Steel Group has provided significant support to the UK speciality steel business, which has seen the demand for some products fall by 60 per cent following the downturn in the aerospace sector due to Covid-19.

“As part of the prudent steps we are taking to manage cash, we are discussing new opportunities with customers and suppliers to improve cash flow and looking to secure additional working capital facilities to support the business.”


In a joint statement, unions Community, GMB and Unite said: “The meeting was positive and constructive and it is clear Mr Gupta intends to secure a refinancing of the debt to provide the business with the necessary liquidity going forward.”

A Scottish Government spokesperson said: “Funding sources available to the GFG Alliance are commercial matters for the business.

“The Scottish Government has a comprehensive security package relating to the guarantee Scottish ministers provided to the Lochaber aluminium smelter in 2016.

“We maintain regular dialogue with the GFG Alliance covering a range of its industrial interests in Scotland across steel, aluminium and renewable energy production.”

CRIMINAL CAPITALI$M A FAMILY BUSINESS
Meltdown? Turmoil at UK steel empire stokes job fears
Issued on: 30/05/2021 -

Sanjeev Gupta's Liberty Steel company employs 3,000 UK workers and parent company Gupta Family Group (GFG) Alliance has 35,000 employees around the world BEN STANSALL AFP/File

London (AFP)

Sanjeev Gupta's Liberty Steel company -- one of the world's largest steel empires -- faces an uncertain future after announcing plans to sell three of its UK plants.

Liberty employs 3,000 UK workers and parent company Gupta Family Group (GFG) Alliance has 35,000 employees around the world, with metalworks and mines in Europe, the United States and Australia.

Gupta was once seen as the saviour of British steelmaking but is now fighting for survival following the collapse of its main lender Greensill Capital and fraud allegations.

The Indian-British billionaire has insisted none of his 12 UK sites will close.

Yet this week's decision to sell three plants in northern and central England plunges 1,500 jobs into uncertainty and comes after three of GFG's French auto parts factories sought bankruptcy protection last month.

Clive Royston, who represents the Community trade union at Liberty's Stocksbridge site in northern England, said he wants Liberty to be a "responsible seller" and find a buyer who will "not just strip off assets".

"We're worried and don't have any details. It's hard because they (workers) are asking questions and I can't answer," he told AFP.

- Liquidity crisis -

Supply chain finance firm Greensill contributed to GFG's expansion through short-term corporate loans and avoided the stricter regulations imposed on traditional banks.

But its abrupt collapse in March triggered a liquidity crisis at GFG as creditors sought to recall their loans.

It has been reported that Greensill had £3.5 billion ($5 billion, 4.1 billion euros) of exposure with GFG.

Greensill's lawyers claimed its demise could threaten 50,000 jobs worldwide.

Liberty has reportedly not repaid an £18-million loan to Metro Bank, which accuses it of breaching "covenants and restrictions". Liberty denies the claims.

Negotiations with Swiss banking giant Credit Suisse, which had 10 billion euros of exposure with Greensill, continue.

The UK government rebuffed Liberty's request for a £170-million bailout due to concerns over opaque corporate structure and governance.

- 'Red Flag' -

The risky nature of supporting distressed companies means investors either make huge profits or lose their whole investment, said Dirk Jenter, of the London School of Economics and Political Science.

As sustaining firms can be investors' best way to recoup their loans, "they (Liberty) are scrambling for money and trying to sell their most liquid assets. It's an attempt to buy time to keep the company alive," he added.

Gupta was the majority owner of the indebted Wyelands Bank, which was probed by the Bank of England in 2019 and wound down in March amid allegations of favouring Gupta's associates.

This month, the UK's Serious Fraud Office opened an investigation against GFG for alleged fraud, fraudulent trading and money laundering, including its financing activities with Greensill.

Jenter said this investigation and allegations of providing fake invoices would deter potential investors and compound Liberty's financial woes.

"It's a red flag. It would take an extraordinarily courageous investor to rely on the numbers provided by Liberty. It makes risking equity almost impossible," he told AFP.

- 'A foundational industry' -

Union representative Royston said coronavirus "crippled" Stocksbridge, which supplies the hard-hit aerospace sector, and stressed the need to protect jobs that have defined the region despite several ownership changes over the years.

"There's not much industry around us. Stocksbridge has been built around the plant. As a lad, you follow your father into the steelworks," he added.

David Bailey, from the University of Birmingham business school, said all British steel manufacturers faced broader challenges, including higher electricity prices and business rates.

A longstanding glut in the global steel market and Chinese dumping have also undercut British steelmakers.

"You might have a period where companies are successful for a while, then these problems raise their heads again. Liberty ran into issues that are more structural," he said.

"They were far too reliant on Greensill when it went under and left themselves too exposed."

Bailey believes the British government should intervene with an American-style conservatorship -- whereby the state runs and reforms companies before returning them to the private sector -- to improve competitiveness and prevent damage to related industries.

"There's a big threat to jobs and this is a foundational industry. We should be doing more to preserve it," he said.

UK business minister Kwasi Kwarteng recently told lawmakers nationalisation was "unlikely".

Government support for steelmakers is linked with decarbonisation as the sector pursues an 80-percent reduction in carbon emissions by 2035.

Liberty has committed to achieving carbon neutrality by 2030 by using more scrap metal and electric arc furnaces powered by renewable energy sources.

© 2021 AFP

UK

CRIMINAL CAPITALI$M

 Serious Fraud Office ‘steps up’ Liberty Steel investigation

©gfgalliance.com

Latest News
April 28 2022
Ben Ormsby

The Serious Fraud Office (SFO) has said it has stepped up its investigation into Sanjeev Gupta’s Gupta Family Group Alliance (GFG) which owns Liberty Steel following the £100m purchase of assets in 2017 from Tata Steel .


Sanjeev Gupta

Investigators issued notices under Section 2 of the Criminal Justice Act 1987 and attended addresses across the England, Scotland and Wales linked to GFG Alliance, to request documents including company balance sheets, annual reports and correspondence related to the SFO’s investigation which started in May last year into “suspected fraud, fraudulent trading and money laundering”.

A spokesperson for the SFO noted its investigators spoke with executives at multiple addresses who co-operated with the operation, and added: “As the investigation is ongoing, the SFO can provide no further comment”.

Liberty Steel which has operations across the country including Rotherham, Stocksbridge, Scunthorpe, West Bromwich and Kidderminster earlier this month Liberty Steel confirmed it would be cutting 207 jobs, as the business looked to restructure and recover from a turbulent period that started with the collapse of its key lender Greensill Capital.

The update comes days after the Financial Times reported that French police raided Gupta’s Paris offices and metalworks – Aluminium Dunkerque – it formerly owned as the French prosecutors looked to escalate their probe into his business dealings.

Sky News and the BBC reported that an internal memo to GFG staff on Wednesday said: “We will comply with the information request orders and will continue to cooperate fully in all manners.

“We have in place very strict information and document preservation policies which we implemented prior to the SFO announcement….We appreciate these enquiries can be disruptive and concerning for employees and stakeholders.

“However, we are encouraged that the investigation is now progressing and is moving closer to a conclusion.”

The company’s chief transformation officer Jeff Kabel added: “Rest assured that this does not impact the operation of our companies and we must continue to focus on our business plans and operating safely”.

GFG has continuously denied all wrongdoing, but the investigation is just one of the challenges which has faced Gupta’s business empire over the last 12 months.

The updates to the SFO and French investigation are just the latest development in the Liberty Steel story which has seen the government reject of a request from GFG to approve an emergency £170m bailout, MP’s call for investigations to stave off another crisis in the industry in November and reports in February warning up to 2,000 jobs were at risk when a winding up petition has been issued against Speciality Steel UK a division of Liberty Steel, before the petition was withdrawn last month by HMRC.

CRIMINAL CAPITALI$M
UK fraud watchdog investigating GFG Alliance

LONDON (Reuters) - Britain's Serious Fraud Office (SFO) is investigating Gupta Family Group Alliance, including its financing arrangements with collapsed Greensill Capital, it said on Friday.

© Reuters/Russell Cheyne FILE PHOTO: The GFG Alliance flag flies at the completion of a 330 million pound deal to buy Britain's last remaining Aluminium smelter in Fort William Lochaber Scotland

"The SFO is investigating suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct of the business of companies within the Gupta Family Group Alliance (GFG), including its financing arrangements with Greensill Capital UK Ltd," the SFO said in a statement.

© Reuters/RUSSELL CHEYNE FILE PHOTO: A view of the Lochaber Aluminium smelter and hydroelectric site, which is owned by Sanjeev Gupta's GFG Alliance, at Fort William

A representative of GFG Alliance, steel magnate Sanjeev Gupta's family conglomerate, said the group had no immediate comment on the matter.

The SFO said it had no further comment given it was a live investigation.

GFG Alliance, Gupta's privately held conglomerate, has relied heavily on Greensill Capital to fund its operations.

Greensill is facing insolvency after its main insurer stopped providing credit insurance on $4.1 billion of debt in portfolios it had created for clients including Credit Suisse.

Britain's Financial Conduct Authority said on Tuesday it was formally investigating the UK operations of supply chain finance company Greensill as part of global probes.

Greensill lent money to firms by buying their invoices at a discount, but collapsed in March 2021 after insurers pulled their cover.

(Reporting by Huw Jones; editing by David Goodman and Jason Nee

Sanjeev Gupta's GFG Alliance strikes debt deal with Credit Suisse
Sun, October 10, 2021, 1:38 PM·1 min read


 Liberty Steel's Sanjeev Gupta pictured in Scotland


LONDON (Reuters) - The GFG Alliance said on Sunday it had agreed a debt restructuring deal with Credit Suisse for its Australian steel and coal mining assets, and announced plans to inject 50 million pounds ($68 million) into the restart of its Rotherham electric furnace in the United Kingdom.

GFG, owned by commodities tycoon Sanjeev Gupta, has been scrambling to refinance its cash-starved web of businesses in steel, aluminium and energy after supply chain finance firm Greensill Capital filed for insolvency in March.

The debt restructuring for its Australia assets will allow GFG to make a "substantial upfront payment" to Greensill Bank and Credit Suisse, with the balance paid in instalments until the new maturity date of June 2023, a statement from GFG said.

Zurich-based Credit Suisse had previously disclosed some $2.3 billion worth of loans exposed to financial and litigation uncertainties within Greensill-linked supply chain finance funds, with some $1.2 billion of its assets related to GFG.

Following the cash injection into its UK steel business, Liberty Steel, production will start in October with a plan for output to reach 50,000 tonnes per month as soon as possible, the statement said.

Jeffrey S. Stein, the chief restructuring officer, said in the statement that new lenders in Europe had expressed interest in refinancing GFG's steel assets.

In Europe, GFG said it had launched a legal action against private equity firm AIP, which said it had taken control of GFG's smelter in Dunkirk, Europe's largest primary aluminium producer.

($1 = 0.7332 pounds)

UK

Liberty Steel set to snap up Tata's Port Talbot steelworks


LaToya Harding
·Contributor
Sat, 21 November 2020

Over the weekend Sanjeev Gupta’s company announced that Swedish firm SSAB was negotiating with Tata over buying its assets in the Netherlands. 

Photo: Reuters/Toby Melville TPX

Indian conglomerate Liberty Steel is poised to snap up Tata’s (TATASTEEL.NS) UK steelworks at Port Talbot in Wales, it has been revealed.

Over the weekend Sanjeev Gupta’s company announced that Swedish firm SSAB (SSAB-A.ST) was negotiating with Tata over buying its assets in the Netherlands. CityAm reported.

If confirmed, the move would lead to the break-up of the group’s European steel operations.

Tata’s Port Talbot steelworks, which currently employs around 8,000 people, has been looking for emergency government funding over the last few months. Last week it revealed it was reviewing all options to ensure the UK business was “self-sustaining” in the future.

Tata Steel UK made a pre-tax loss of £654m ($869m) for the previous financial year. Back in 2016 Liberty Steel submitted a previous bid for the Port Talbot site after Tata put it up for sale. However, it later backtracked and decided to hold onto the plant.

Sources close to Liberty Steel told CityAm that in the event that no funding was forthcoming, Gupta’s firm, which has an appetite for struggling metals businesses, would be a willing buyer.

READ MORE: SSAB eyes Tata Steel's Dutch assets as European consolidation picks up

It comes as Liberty, which is part of Gupta’s GFG Alliance, has submitted a bid for German conglomerate Thyssenkrupp’s (TKA.DE) struggling steel division, potentially creating a disruption behemoth in a crowded European market.

Earlier this month it was in talks with the German government over an aid package worth at least €5bn ($5.9bn, £4.5bn).

At the time, sources familiar with the matter told Bloomberg that Chancellor Angela Merkel’s government signaled a willingness to provide financial support to shore up the unit and ensure future domestic production of an environmentally friendly form of steel.

Troubled Thyssenkrupp will likely lose €1bn this year, according to the Financial Times.

Liberty Steel declined to comment.

Watch: Thyssenkrupp to cut cut another 5,000 jobs

UK

Government ‘negligence’ to blame for steel firm’s collapse, says union

Anna Wise, PA Business Reporter
Wed, 8 February 2023

Government negligence is to blame for the collapse of British steel business Aartee Bright Bar, a steelworkers’ union has claimed.

Aartee Bright Bar, which says it is the UK’s largest distributor of engineering steel products, called in administrators Alvarez & Marsal (A&M) on Tuesday after facing tough economic conditions and surging metal costs.

The leading trade union for steelworkers, Community, hit out at the Government for failing to act sooner over issues including increased energy costs, which have heaped pressure on struggling firms in the sector.

The West Midlands-based business has around 250 staff, operating from two productions sites in Willenhall and Dudley, and three distribution and sales offices in Rugby, Bolton, and Newport in South Wales.

It is not yet known whether there will be an impact on jobs following the insolvency.

Michael Magnay, joint administrator at A&M, said: “Like many businesses in its sector, Aartee Bright Bar has been facing significant headwinds as a result of the challenging economic environment and fluctuating steel prices.

“Against this backdrop, administrators have been appointed and we are exploring the options available to preserve value.”

Trade union Community argued that the business’s collapse was representative of the pressure the wider industry was facing, particularly from high energy and metal costs.

Alun Davies, national officer for Community, said: “The news of Aartee Bright Bar crashing into administration is extremely worrying.

“All parties must do whatever it takes to protect the workforce in this difficult process.

“These developments demonstrate the extreme pressures the industry is under.

“This is the price of Government’s negligence and its failure to act on issues like energy costs and procurement.”

The news follows reports last week that British Steel is planning to axe hundreds of jobs as part of closures of its coke ovens in Scunthorpe, according to a union source.

The Government is reportedly considering cash injections into both British Steel and Tata Steel UK.

But Charlotte Brumpton-Childs, national officer at the GMB union, said the Government’s investment was a “sticking plaster that does nothing to help the long-term structural issues affecting our steel industry”.

She added that the steel industry could “wither and die like so much of our proud manufacturing heritage” without meaningful support.

Furthermore, Liberty Steel revealed last month it was implementing the next stage of its restructuring programme which could affect up to 440 jobs.

The firm said it needed to refocus its operations in order to adapt quickly to the challenging market.

Liberty Steel, headed up by Sanjeev Gupta, counts Aartee Bright Bar as one of its customers, according to reports.

There are more than 33,000 people directly employed by Britain’s steel industry and a further 40,000 working in the steel supply chain, Community said.

Britain’s steel industry will be worth £6 billion by 2030.

Liberty Steel customer Aartee Bright Bar crashes into administration


Tue, 7 February 2023 


A major customer of Britain’s third-biggest steel producer has been forced to call in administrators, deepening the financial gloom engulfing the industry.

Sky News has learnt that Aartee Bright Bar, which is based in the West Midlands and employs 250 people, has this week drafted in Alvarez & Marsal to handle an insolvency process.

Liberty Steel is part of the industrial conglomerate headed by Sanjeev Gupta.

Mr Gupta is reported to have close ties to Ravi Trehan, Aartee's founder, while Greensill Capital, the controversial supply chain finance group which itself collapsed in 2021, is said to have financed a number of trades between the two.

Michael Magnay, Joint Administrator at A&M, said in a statement issued to Sky News: "Like many businesses in its sector, Aartree Bright Bar has been facing significant headwinds as a result of the challenging economic environment and fluctuating steel prices.

"Against this backdrop, Administrators have been appointed and we are exploring the options available to preserve value."

A steel industry source said on Tuesday that Liberty Steel would be an obvious buyer of Aartee Bright Bar's assets out of administration.

A spokesman for Liberty Steel declined to comment, although a source close to it said it would "look at how it could help".

Aartee, which also has offices in Lancashire and Wales, is a manufacturer, stockist and distributor of steel products.

A statement purportedly made on behalf of Aartee Bright Bar, which was issued by email from Aartee Group, said: "Despite the very significant challenges facing the UK steel industry Aartee Bright Bar (ABB) has been making regular and substantial payments to its creditor FGI. It is therefore disappointing that FGI has chosen to enforce on a small remaining debt which the business has a plan to clear in the very near future.

"The management of ABB will work speedily to ensure the matter is resolved quickly with the administrator."

Its insolvency comes amid talks between the government and Liberty Steel's two larger competitors - Tata Steel and British Steel - about £600m of taxpayer funding to aid their transition to greener electric arc furnaces.

The funding for British Steel has been thrown into doubt by its Chinese owner's plan to axe about 800 jobs, mainly at its Scunthorpe plant.

Mr Gupta has also announced proposals to cut hundreds of jobs across his UK operations.

CRIMINAL CAPITALI$M

GFG Alliance faces fraud investigation as financing crisis deepens

EUROPE / 14-05-21 / BY JOHN BASQUILL



The UK’s Serious Fraud Office (SFO) has an­n­ounced it is investigating potential fraudulent trading and money laundering at GFG Alliance, dealing another serious blow to the group’s efforts to find emergency funding after the collapse of Greensill.

The SFO announced on May 14 it would probe “suspected fraud, fraudulent trading and money laundering in relation to the financing and conduct of the business of companies within the Gupta Family Group Alliance (GFG), including its financing arrangements with Greensill Capital”.

It is the first time enforcement authorities have announced an investigation into the alliance, which is headed by metals magnate Sanjeev Gupta. Members include several UK-based steel industry companies, as well as trading house Liberty Commodities.

The SFO says it cannot comment further as its investigation is ongoing. A GFG spokesperson says the group notes the announcement and “will co-operate fully with the investigation”.

“GFG Alliance continues to serve its customers around the world and is making progress in the refinancing of its operations which are benefitting from the operational improvements it has made and the very strong steel, aluminium and iron ore markets,” the spokesperson adds.

The investigation stems from the insolvency of Greensill, which until its collapse in March was a major source of funding to GFG Alliance companies.

The Financial Times revealed that as part of Greensill’s insolvency proceedings, administrators Grant Thornton approached several firms with outstanding invoices from Liberty Commodities – only to be told they had never done business with the company.

Gupta has since said outstanding invoices are part of future receivables programmes, whereby Greensill would provide funding against invoices that it expected to generate in future.

In some cases, he says, those were from companies merely “identified as a potential customer” rather than those already trading with Liberty.

US-based mining company Bluestone Resources has made the same claims in a lawsuit against Greensill, alleging that Greensill executives helped draw up a list of potential customers as the basis for providing finance.

But Greensill has attempted to distance itself from that practice. Founder and chief executive Lex Greensill insisted to a UK parliamentary inquiry this week that the company only funded future receivables programmes where there was a history of real trading activity.

David Cameron, former UK prime minister and a Greensill advisor until its collapse, added at a second hearing that the allegations against GFG “are very disturbing, if true”, but that he had no knowledge of those arrangements.

“It seems concerning and I’m sure it needs to be got to the bottom of,” he said.

Accusations of questionable activity linked to GFG Alliance have emerged several times in recent years, however.

The group has struggled to attract bank financing after several institutions terminated relationships between 2016 and 2018, citing concerns of questionable activity. Several industry representatives told GTR in April that the appetite for lending to GFG was already close to zero.

There had been some glimmers of hope for Gupta, with his steelmaking business in the UK reaching an agreement for a £200mn loan from US asset manager White Oak in May, according to Bloomberg.

White Oak has since confirmed it has terminated the agreement with GFG, however. “As with any regulated financial institution, we are not in a position to continue discussions with any company that is under investigation by the Serious Fraud Office for money laundering,” the company says.

Trade finance experts say that view would likely be shared across the sector.

“It would be highly unlikely if not impossible to get any level of financing for your business while being investigated for serious fraud,” says Oliver Chapman, group chief executive at supply chain procurement firm OCI, speaking to GTR.

“One must question any financier who would want to go near a business in that situation. And with the high levels of due diligence within the industry now, I don’t think a financier could be seen to be working with a company being investigated, from a perception point of view – even if there was a sound business case.”

Sean Edwards, chairman of the International Trade and Forfaiting Association (ITFA), adds: “Our members would be very careful about dealing with a company that’s under an investigation like this.”

Public sector lending has also been refused, with UK ministers citing concerns over the group’s opaque structure.

UK business secretary Kwasi Kwarteng said in April that the wider group “has financial problems that we have not really got to the bottom of” and so approving its request for a £170mn bridge loan would be “very irresponsible”.

 

Czech government says two investors are interested in taking over Liberty Steel’s insolvent Czech operations

Liberty Ostrava entered insolvency proceedings last week. / bne IntelliNews

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By Albin Sybera June 19, 2024

Two investors are reportedly interested in taking over Liberty Ostrava, the largest Czech steel mill, which entered insolvency proceedings last week.

Czech Minister of Labour and Social Affairs Marian Jurecka said he know of two "very seriously interested” investors, adding that “it cannot be ruled out that next week or the week after another will appear”.

Online news outlet Seznam Zpravy (SZ), reported earlier that defence and heavy industry conglomerate Czechoslovak Group (CSG), financial group Creditas and and local regional metals company Trinecke zelezarny are among the potential investors into Liberty Ostrava.

The steelworks, owned by struggling British-based Liberty Steel,  part of industrialist Sanjeev Gupta’s GFG Alliance, has shuttered most of its production since the end of last year when its key energy provider Tameh Czech stopped supplies to the plant over missing payments.

Employees have been on paid leave since then and the company management pursued a reorganisation plan which was backed by the majority of creditors under a court moratorium protecting Liberty Ostrava against creditors.

However,  without any warning, last Friday Liberty Ostrava appeared in the insolvency registry, with stated liabilities exceeding CZK5bn.  

Liberty Steel later said that,  "given the ongoing material risks and uncertainties facing Ostrava, Liberty has decided the right course of action is to initiate a sale of Ostrava’s operations and withdraw the preventative restructuring plan in order to enter into a judicial reorganisation under the Insolvency Act".

The company said the reorganisation would  "provide the time and protection to undertake the sales process and further restructuring measures to stem losses".

The company blamed market conditions – namely global oversupply and historically high imports into Europe from countries which face much lower regulatory and decarbonisation costs. Soaring energy and coal prices and falling steel demand and prices following Russia’s invasion of Ukraine have hurt a sector already struggling to adapt to European Union environmental rules that reduced competitiveness compared to Asian rivals. 

It also pointed to the Czech goverment's failure to transfer emission permits to Liberty Ostrava. Relations between the British-based group and the Czech government have all but broken down, with Czech ministers accusing the indebted group of failing to communicate and of moving money out of the company to other operations.

The government has refused to run to the aid of Liberty Ostrava and now appears determined to transfer its operations to a domestic investor.

SZ’s commentator Petr Holub and editor-on-chief of Reporter magazine, Petr Holub, have pointed out that for a potential takeover, the insolvency court would first have to turn down Liberty Steel's proposed reorganisation, which could take  “weeks or months”.

Jurecka made his comments after a meeting with Liberty Ostrava’s labour unions and representatives of the labour office on Tuesday, June 18, where state aid to Liberty Ostrava’s employees was discussed.  “If the plant is to re-start again then we need to keep the people, and not have them quit en masse,” Jurecka told the media.

“We view positively that strategic investors are appearing. I firmly believe that we will maintain as many workplaces as possible,” head of the labour union KOVO Roman Druco was quoted as saying by Czech Television (CT), which also cited the general director of the country’s Labour Office, Daniel Kristof, as saying that 437 employees had filed a request for salary remuneration as of Monday. Under Czech law the state can cover missed salary payments in the event of company insolvency.  

Kristof said that his office could start with the salary payments next week and estimated the costs to be around CZK1bn (€40mn). Before entering insolvency, Liberty Ostrava had around 5,000 employees, according to the reports in the Czech public media.  Unions say up to 30,000 jobs in total are dependent on the plant in what is one of Czechia’s poorest regions.

Anyone home? ‘Doorway’ on Mars spawns alien conspiracy theories

Sarah Knapton
Thu, May 12, 2022, 

Grainy image shows what appears to be a carved-out doorway on the side of the rock face on Mars - NASA/JPL-Caltech/MSSS/SWNS

At first glance, it looks as if a doorway has been carefully carved into a rock face on Mars.

The grainy image, taken by the mast-mounted camera on Nasa’s Curiosity rover on May 7 this year, appears to show an opening with an arched lintel leading to a passageway with smooth walls.

Conspiracy theorists have seized upon the snap as evidence for life on the Red Planet, but scientists were quick to point out that the surrounding geology gives a clear picture of how the formation arose - and unsurprisingly it does not require Martian architects.

A large fissure to the left of the doorway demonstrates rock-cracking events frequently occur in the region, while a boulder in the foreground appears to have fallen from the opening.

Sanjeev Gupta, a professor of earth science at Imperial College London, one of the scientists of Nasa's Curiosity rover mission, said the hole was formed through “normal geological processes”.

A large fissure to the left of the doorway demonstrates rock-cracking events frequently occur in the region - NASA/JPL-Caltech/MSSS/SWNS

“The boulder likely just got eroded off a hillslope and tumbled down,” he said. “It does not require a meteorite strike.

“The crack is a fracture and they are abundant on Mars and Earth - no need for marsquakes to produce them.

“There is nothing at all strange in the image - these are just normal geological processes.”

It is not the first time that images from Mars have sparked theories that civilisations may have inhabited the planet.

In 1977, Nasa’s Viking 1 spacecraft photographed what appeared to be a face, staring up from the surface, leading to claims that Martians may have constructed monuments like the Sphinx.

When Nasa’s Mars Global Surveyor flew over the area 11 years later, snapping images 10 times sharper than the original Viking shots, the “face” was found to be a shapeless rock formation. The original facial features had been caused by shadows.
Human brains programmed to find meaning in images

In May 2015, Curiosity photographed a pyramid about the size of a small car, which some people speculated may be the capstone of a larger, buried megalith.

But at the time, Nasa pointed out that the rock was similar to angular volcanic rocks found in Hawaii or Iceland.

Humans brains are programmed to find significance in random images, a psychological phenomenon known as pareidolia.

Facial pareidolia, which is particularly strong, would have helped our ancestors to spot predators in dense undergrowth or in the dark.

It is likely to be the reason why people believed they had spotted a yeti on Mars Gusev crater, in pictures taken by Nasa’s Spirit rover in 2008. A rock which resembled an iguana was also spotted in 2013.

Scientists believe that life may once have existed on Mars, but would struggle today due to the lack of atmosphere. Nasa and the European Space Agency (ESA) have plans to drill down into the surface in the hope of finding fossilised remains of alien lifeforms.

BUT IS IT CARBON FREE

Steel Could Soar As The World Transitions To Renewable Energy

Editor OilPrice.com
Sat, June 18, 2022

Steel has a vital role in boosting the UK’s energy infrastructure and help power the transition to a greener economy, argued Severfield chief executive Alan Dunsmore.

The steel boss told City A.M. that the main opportunity in a market defined by challenging headwinds such as inflation and supply chain disruption was in the growth of domestic infrastructure.

He said: “I think the main opportunity is around infrastructure growth and investment, and the transition to green economy, and the investment that will drive. There are a lot of options there in terms of power and infrastructure – particularly nuclear power.”

Severfield is the UK’s largest steel contractor, trading on the London Stock Exchange, and is hoping to benefit from Prime Minister Boris Johnson’s ‘big new bet’ on nuclear.

The government is pushing for the greenlight of eight new reactors by the end of the decade – with Sizewell C receiving its backing for public funds yesterday as part of the government’s new funding model.

Earlier this year, Downing Street unveiled its supply security strategy – targeting a ramp-up in nuclear power generation from 7GW to 24GW over the next three decades – alongside a wider expansion in domestic energy production following Russia’s invasion of Ukraine.

Steel is a key component in the construction of nuclear power plants, and is also used in the production of wind turbines, solar panels, and hydrogen power alongside the North Sea oil and gas exploration and drilling.

Dunsmore concluded: “The green agenda could drive the long-term sustainability and viability of steel, as the product is endlessly recyclable.”

Commenting on current challenges in the industry, he also said the sector has been used to headwinds to navigate over the past five to six years since the UK voted to leave the European Union.

Severfield has sought to reduce its exposure to challenges over the past eight years by expanding its options for producing both raw steel and constructed steel – to ensure it is not overly dependent on anyone supplier.

He explained: “We’ve spent a lot of time just broadening and diversifying our supply options and making sure that we can react to whatever happens,”

Severfield revels in record order book as demand rebounds from pandemic

Dunsmore was speaking with City A.M. following the release of Severfield’s full-year results, which revealed strong revenues and profits powered by a record order book.

Revenues had risen 11 per cent to £403.6m, while underlying profit had also increased 11 per cent to £27.1m, with the company raising its total dividend seven per cent to 3.1p per share.

The firm has navigated the choppy waters of the pandemic, the energy crisis, and Russia’s invasion of Ukraine thanks to a rebounding appetite in construction – enjoying a record UK and Europe order book totaling £486m – up from £393m in November.

Its orders includes a film studio, an industrial centre and the upcoming new stadium for Everton Football Club.

Related: John Kerry: Green Transition Will Be Bigger Than The Industrial Revolution

The company has kept its outlook of £31m in pre-tax profits next year unchanged, with £397m of its hefty order book deliverable in the next 12 months.

Severfield’s expansion into India has also gathered pace, with its order book growing to £158m, reflecting strong underlying demand for structural steel in India

The company has also revealed the successful completion of a new £50m revolving credit facility maturing in December 2026.

Its performance is a bright spot for a troubled industry, with steel rival GFG Alliance’s legal sojourn suffering another setback last week after Sanjeev Gupta failed in his last-ditch attempt to get a winding-up order thrown out after Credit Suisse.

The Swiss investment group started insolvency hearings against the group’s companies last month.

This follows the collapse of Greensill Capital last year – one of GFG Alliance’s biggest backers.

Meanwhile, Business Secretary Kwasi Kwarteng has also been weighing up the possibility of cutting the steel industry out of network charges to help ease the pain of spiraling energy prices.

Harry Philips, investment analyst Peel Hunt, has maintained the investment group’s ‘Buy’ stance, with a target price of 100p.

He said: “Severfield has an evolving strategy that will enable it to be more readily aligned with growth – it has been already but it will become clearer to see; it has developed a good track record with infill acquisitions so more would be a plus; and India is on the cusp of making a significant step forward on the profit line that can accelerate value or partial realization – the latter aspect is simply not reflected in the share price. “

Shares are up to five percent in the company on the FTSE AIM-All Share following today’s results, with the firm trading at 63p per share.

Thyssenkrupp finds steel is the hardest sell in company’s breakup
Bloomberg News | November 18, 2021 

Photo courtesy of thyssenkrupp Industrial Solutions AG.

Thyssenkrupp AG is gearing up for its most difficult sale yet — the disposal of its heart-and-soul steel business, the next step in a dramatic downsizing that’s pulling the manufacturer back from the brink.


Europe’s steelmaking industry has struggled amid rising cost for pollution and cheaper imports from Asia. Thyssenkrupp has failed to find an external partner for the business and a spinoff is proving difficult because of the unit’s high pension burden, powerful labor unions and the vast investments needed to decarbonize steel production.

“This is a very complex undertaking characterized by economic challenges and a large number of uncertainties,” Chief Financial Officer Klaus Keysberg said Thursday, adding that the company needs more time to come up with a concrete plan for the business. “Nevertheless, we are convinced that a stand-alone solution offers the best future prospects.”

Chief Executive Officer Martina Merz is leading a deep restructuring of the conglomerate, which was fighting for survival even before the pandemic hit. Once synonymous with German industrial prowess, Thyssenkrupp has suffered a cash drain as a global steel glut compounded profound structural issues across the firm.

After selling its prized elevator unit for 17.2 billion euros ($19.5 billion) last year, the manufacturer reached agreements during the summer to offload smaller mining and infrastructure businesses and is pushing ahead with further streamlining.

The overhaul is starting to pay off. Thyssenkrupp said it expects expects cash flow to break even this year — which would end a four-year money drain — and earnings to double as the effects of the turnaround start to take hold. Activist investor Cevian Capital AB, Thyssenkrupp’s second-biggest shareholder, said it’s “pleased” with progress streamlining the company.

“We believe the guidance, even if free cash flow was not firmly committed to be positive yet, should be well received,” Jefferies analyst Alan Spence said in a report.

Thyssenkrupp gained 6.7% as of 1:23 p.m. in Frankfurt. The shares have climbed by about a third this year.

Slimming structures

Thyssenkrupp’s plans come amid renewed focus on slimming down industrial conglomerate structures — prompted by the high-profile breakups of General Electric Co., Johnson & Johnson and Japan’s Toshiba Corp. Siemens AG said last week it expects higher profit margins next year as it reaps the benefits of years-long streamlining that its arch-rival GE is starting to embark on.

Thyssenkrupp said Thursday its restructuring would continue with plans to separate the Uhde Chlorine Engineers unit, confirming an earlier report by Bloomberg News. The division, said to be worth as much as 5 billion euros, produces plants that generate hydrogen from renewable electricity, a business that requires investment to benefit from the global shift to clean energy.

The company said it prefers an initial public offering and seeks to retain a majority interest in the business.

Steel challenges

Spinning off the steel unit may be more challenging. While the division swung to a profit in the financial year ended September on the back of rising steel prices, its capital-intensive mills require around 10 billion euros in investment to convert to low-emissions production.

An attempt by Thyssenkrupp to merge the business with the European unit of India’s Tata Steel Ltd. was scrapped amid European Union antitrust concerns and a bid from British tycoon Sanjeev Gupta unraveled earlier this year due to a lack of financing.

In its earnings report released Thursday, the maker of industrial machinery, automotive parts and submarines said it’s benefiting from the global economic recovery and its restructuring measures. Thyssenkrupp’s adjusted earnings before interest and taxes last year rose to 796 million euros on sales of 34 billion euros.

Still, the company is grappling with widespread supply-chain issues that are disrupting production across many industries.

“Enormous challenges remain, especially due to the semiconductor shortage and the uncertainties arising from the coronavirus pandemic,” Merz said.

(By William Wilkes — with assistance from Christoph Rauwald)

Thyssenkrupp plans more listings as turnaround benefits seen


By Christoph Steitz, Tom Käckenhoff

ESSEN, Germany (Reuters) - Thyssenkrupp mapped out plans to break off further parts of its sprawling empire on Thursday, continuing a major overhaul that has put the conglomerate on a more stable financial footing after years of losses and leadership crises.

“We’ve left no stone unturned in our business to improve our performance,” Chief Executive Martina Merz said. “After a good two years of intensive transformation work, we can now say that the turnaround is evident.”

The submarines-to-steel group, which was forced to part ways with its elevator division last year to avert collapse, said it was now preferring to list its hydrogen unit Uhde Chlorine Engineers (UCE) in an initial public offering.

UCE, a 66-34 joint venture of Thyssenkrupp and Italy’s De Nora, is the world’s largest supplier of chlor-alkali membrane technologies used to produce hydrogen. Analysts have valued UCE anywhere between 3 billion to 6 billion euros.

Merz said Thyssenkrupp would keep a majority stake in UCE in an IPO, which is planned for the spring, adding a capital markets day for the unit was targeted for January.

Thyssenkrupp is also studying the conditions that are required for a spin-off of its steel division, Europe’s second-largest, a move previously flagged but dependent on government subsidies to shift the focus towards carbon neutral production.

Shares in Thyssenkrupp rose as much as 7.4%.

Corporate break-ups are in vogue amid a growing consensus that companies perform best if they are focused more closely on related business areas, as well as increasing pressure from activist hedge funds pushing them in that direction.

General Electric Co, Toshiba Corp and Johnson & Johnson all last week announced plans to spin off divisions.

More concrete plans for additional listings at Thyssenkrupp come as operating profit is expected to more than double next year, partly boosted by a broader economic recovery for its products, which also include car parts and bearings.

“However, enormous challenges remain, especially due to the semiconductor shortage and the uncertainties arising from the coronavirus pandemic,” Merz said.

Adjusted earnings before interest and tax are expected at 1.5 billion euros to 1.8 billion euros ($1.7-$2 billion) in the 2021/22 fiscal year, up from 796 million euros a year earlier, said the conglomerate. ($1 = 0.8838 euros)

CRIMINERAL CAPITALI$M

LME rocked by new nickel scandal after finding bags of stones
Bloomberg News | March 17, 2023 | 

Stock image.

The London Metal Exchange has discovered bags of stones instead of the nickel that underpinned a handful of its contracts at a warehouse in Rotterdam, in a revelation that will deliver another blow to confidence in the embattled exchange.


The amount of metal represents just 0.14% of live nickel inventories on the LME, worth about $1.3 million at current prices, so the immediate impact on metals markets is limited. But the shock announcement has much wider implications: in an industry riddled with scandals, the LME’s contracts are viewed as unquestionably safe. The news that even a few of them have been compromised will raise fresh questions about its systems and procedures while the 146-year old exchange is still wading through the fallout of its last nickel crisis.

“LME warehouse warrants used to be the gold standard of warehouse warrants around the world, treated as a near-cash equivalent,” John MacNamara, chief executive officer of Carshalton Commodities Ltd. and a veteran commodity trade finance banker, wrote on LinkedIn. “Something has gone horribly wrong at the LME.”

It also comes at a fraught time for the wider metals world, after trading giant Trafigura Group revealed in February that it had been the victim of a vast alleged fraud involving missing nickel cargoes. The news that a powerful player like Trafigura is facing hundreds of millions of dollars in losses has spooked others in the industry and prompted some to check on their own metal cargoes.

Related Article: Trafigura faces $577 million loss on alleged nickel fraud

However, the one place where metal has always been considered perfectly safe is once it has been registered “on warrant” in an LME-approved warehouse. Contracts on the LME, which are the global benchmarks for industrial metals including aluminum, copper and nickel, are underpinned by physical metal in the network of warehouses around the world — any trader holding a contract to delivery receives a parcel of metal in an LME-registered warehouse.

The LME discovered the problem after it received reports that some nickel delivered out of a warehouse in Rotterdam contained bags of stones instead of nickel briquettes. The warehouse is operated by Access World, according to people familiar with the matter. The company was previously owned by Glencore Plc, and said in January it had been acquired by Global Capital Merchants Ltd.

Access World, which is one of the more prominent companies that operates facilities registered on the LME network, investigated and subsequently found that the bags of “nickel” underlying nine contracts — representing 54 tons of metal — did not contain the nickel that they should have done. The nine warrants have been invalidated and the warrant owner has been notified, the LME said, without naming the owner. The metal had been registered as live in the LME warehouse since early 2022, according to one of the people.

Spokespeople for Access World and Glencore declined to comment.

The LME warehousing system has over the years proved resilient to wider instances of fraud in the metals industry, which typically involve falsification of shipping and storage documents. The LME system is viewed as more secure because the exchange creates its own warehouse warrants and transfers ownership of them digitally. But it relies on warehousing companies to check the material as it enters their facilities to ensure the integrity of the market — including by weighing the bags that move in and out of the system.

It’s not clear whether the bags ever contained nickel, and whether the issue is a result of error, theft or fraud.

However the LME said that the bags clearly didn’t match the expected weight, suggesting that the warehouse at the very least failed to weigh those that were shipped on the way out.

The LME said there is no reason to believe that other warehouses are affected, but the exchange has asked that licensed operators recheck warranted nickel, it said in a statement. It noted that the issue related to nickel briquettes packed in bags, and so other metals, which do not allow bagged delivery, “are not susceptible to this type of irregularity.”

Trafigura said in a statement that the LME announcement had no connection with its own legal action against a group of companies connected to and apparently controlled by businessman Prateek Gupta. Trafigura does not own any of the nine warrants that have been invalidated by the LME, the company said.

For the metals industry, a long history of risk and fraud means that missing cargoes are far from unusual, and nickel is a particular favorite because of its high value. In 2017, French and Australian banks got hit by loan losses in 2017 that totaled over $300 million after they discovered fake documents for nickel stored in Asian warehouses owned by Access World, while Bloomberg has reported that Russia’s Sberbank PJSC discovered in 2018 that containers of nickel in Rotterdam that it financed on behalf of Sanjeev Gupta’s Liberty Commodities had already been emptied.

And just last month, Trafigura said it was facing more than half a billion dollars in losses after discovering metal cargoes it bought didn’t contain the nickel they were supposed to.

Yet metal placed on the LME is supposed to be different. For the exchange, the issue is a major headache, coming as it is still dealing with the fallout of its last nickel crisis — the cancellation of billions of dollars in trades after prices spiked last year. Its regulator, the Financial Conduct Authority, earlier this month announced its first ever enforcement probe into an exchange over the LME’s conduct in the nickel crisis, and the exchange has promised to announce a series of reforms by the end of this month.

The nickel market has struggled to return to normal since the crisis, and is still operating on shortened hours. The LME had planned to allow the beleaguered nickel contract to resume trading during Asian hours from Monday, but has delayed the move by a week.

“We need the LME to function properly,” said Michael Widmer, head of metals research at Bank of America Corp. “It’s just not at the moment, that’s the problem.”

(By Jack Farchy, Mark Burton and Archie Hunter)