Gupta confirms UK government removed Greensill loan guarantee
Sanjeev Gupta has spoken publicly for the first time since the collapse of its main funder Greensill Capital, defending its business practices, the use of debt and the purchase of personal property.
In a podcast, the metals mogul, whose conglomerate GFG Alliance was rocked by the collapse of Greensill, said: “What I can say for sure is that GFG hasn’t broken any rules.”
He admitted for the first time that the UK government had stripped Greensill of collateral on hundreds of millions of pounds of taxpayer loans to GFG.
Gupta, however, insisted that Greensill had taken “extensive legal advice” on the application for the state-backed coronavirus loan program, which was launched by the government at the height of the pandemic last year. Greensill had “followed all the rules,” Gupta said.
In the podcast, intended for GFG employees but available to the public, Gupta said people shouldn’t forget “what we have accomplished”.
Describing GFG as a “decarbonization leader” who had “largely won the green steel argument,” Gupta noted that he had built his empire “everything from scratch” in just eight years.
GFG, which owns smelters, mines and power plants around the world, owes billions of dollars and has come under heavy pressure to consolidate its finances in the wake of the Greensill collapse. The Financial Times revealed this month that UK taxpayers are at risk to over £ 1 billion in government guaranteed debt.
Gupta declined to disclose the exact amount of the company’s debt, admitting only that “it is substantial” and “in the billions”. While other parts of his group had diversified their funding from Greensill, GFG’s steel business is still largely funded by the finance company. GFG still hopes to strike a standstill debt agreement with Greensill’s directors, the industrialist said.
Gupta said it had launched a program, dubbed “Project Athena,” to conserve cash in its steel operations. The state of its steel activities in the UK has been of particular concern, with unions warning up to 5,000 jobs are at risk across the country.
The UK government last week rejected Gupta’s request for more than £ 170million to help with working capital, as well as additional funds to cover short-term operating losses from the group’s UK operations.
Explaining his group’s long-term relationship with Greensill, Gupta said the finance company has been almost like a “breath of fresh air” offering “innovative ways to raise funds”. Asked how the funding works, Mr. Gupta said Greensill has provided “long-term funding using our future cash flows”.
Gupta, who has overseen the unfolding crisis in his group from a residence in Dubai, also spoke about his purchase of a £ 42million property in London.
The FT revealed that Gupta bought last year the six-story house in the Belgravia district of London. “We basically wanted to settle down. We looked for a family home, ”he said. “We took out a mortgage and bought a nice house.”
In the podcast, the industrialist insisted that he had “exchanged” contracts on the house “long before” the Covid-19 pandemic.
The UK land register shows the deal was made in August 2020 on behalf of his wife Nicola Gupta. The Swiss branch of UK lender Barclays provided the mortgage.
“Friends are very important and doing business with friends is actually the safest form of business in my experience,” Gupta said.
He added that these transactions were only a small part of his group’s overall business, as his GFG alliance had up to “100,000 customers worldwide”.
“My friends are, you know, just a handful of people,” he said. “But I am proud of the relationship we have with them.”