UK trade unions called on the government to play an “active role” in securing the future of Liberty Steel after the high-profile collapse of the company’s financial backer Greensill Capital.
The steel unions Unite, Community and GMB, met with Liberty owner Sanjeev Gupta to seek assurances “and to request full transparency on the challenges” facing the company.
Describing the meeting as “positive and constructive”, the trio said Gupta intended to secure a refinancing of the debt to provide the business with the necessary liquidity going forward.
“We recognise Mr Gupta’s desire to see Liberty Steel succeed, and recognise also his personal contribution in giving distressed UK steel assets a new lease of life,” they said in a statement via the the National Trade Union Steel Coordinating Committee.
“Liberty Steel is a strategic business for the UK, producing high quality steels for sectors of the economy including defence, energy, aerospace and engineering. Liberty Steel is also a low carbon steelmaker, and the assets must be central to any strategy to decarbonise our steel industry.”
The unions called for a solution “to prevent us having to rely on high carbon imports from countries that don’t play by the same rules”.
Private-equity firm Apollo Global Management is reportedly expected to cherrypick the best of Greensill assets out of administration. Greensill, run by the Australian businessman Lex Greensill, who has close ties to former UK prime minister David Cameron, had last year sought to value itself at $7bn.
Greensill, which allows businesses to borrow money to pay their suppliers, was thrown into crisis after its own financial backers, including Switzerland’s GAM Holding and Credit Suisse, withdrew support amid concerns about the firm’s management and the growing number of loans issued to Gupta’s GFG Alliance.
The crisis at Greensill has also triggered alerts at the Bank of England and the European Central Bank. The BoE’s Prudential Regulation Authority (PRA), which is in charge of monitoring financial stability in the UK, has asked banks to reveal how much of their business is linked to Greensill or GFG Alliance.
While Greensill’s parent company is registered in Bundaberg, the Australian home town of Lex Greensill, most of its business is based in London, where it employs about 600 of its 1,000 global staff.
Credit Suisse has frozen withdrawals for up to £10bn worth of funds in the lender’s accounts as security, due to the bank’s heavy exposure to Gupta’s businesses in the UK, the BBC reported on Monday.
Those businesses include Liberty Steel – the UK’s third largest steelmaker, a large part of which is made up of former Tata Steel assets that were sold to Gupta’s GFG Alliance in 2017.
It was also understood the funding requirements of Gupta’s businesses make up more than 50% of Greensill’s lending volumes, with the BBC citing a source close to the bank as putting GFG’s funding at $70m (£50.6m) per day.
Business secretary Kwasi Kwarteng reportedly held an emergency meeting on Sunday with Liberty Steel’s chief executive John Ferriman to discuss contingency plans in case Greensill went under, though those options were not believed to include nationalisation.
The company employs 3,000 people at 11 locations, with another 2,000 staff at engineering businesses within the Liberty group.