Credit Suisse casts doubt on Sanjeev Gupta’s £200m bailout loan

Sanjeev Gupta’s attempts to save his British steelworks hit a roadblock on Friday as Credit Suisse, which is owed $1.2bn by the industrialist, said it had yet to be contacted over a proposed £200m bailout loan and could not agree to terms if its clients lost out.

Gupta has agreed the loan from White Oak, a US-based private finance group, to provide an injection of much-needed working capital to his ailing speciality steel plants in Yorkshire that would allow them to return to full production.

People with knowledge of the agreement said Gupta would need to secure the approval of Credit Suisse, which provided finance to his GFG Alliance group of businesses through the collapsed supply chain finance group Greensill Capital.

“Neither GFG Alliance nor any of its companies have informed us of any finance proposal or shared any information with us,” the Swiss bank said in a statement.

“We want a constructive solution and would like nothing better than a credible financial restructuring plan which offers a viable solution for the UK steel industry and keeps steelworkers in their jobs. We have asked for that repeatedly and nothing has been forthcoming.”

Credit Suisse lent $1.2bn to GFG through its $10bn suite of supply-chain finance funds, which the bank was forced to suspend in March after Greensill’s insurer refused to renew cover. Credit Suisse has paid back just over half the assets to the funds’ 4,000 investors, but has said it may struggle to return up to $3bn as some creditors were unable or unwilling to repay the funds.

“Credit Suisse has a fiduciary obligation to its fund investors and cannot consent to any solution that is not fair for them,” the bank said in its statement on Friday. “A credible and realistic financial restructuring plan from GFG Alliance would be good for fund investors and good for the UK steel industry.”

GFG declined to comment.

Credit Suisse has a $440m claim against Greensill Capital’s UK entity, according to documents filed by administrator Grant Thornton this week, which matches the amount the Swiss bank’s clients are owed in relation to troubled US construction company Katerra.

The Financial Times reported in March that Credit Suisse’s funds failed to benefit from an emergency cash injection late last year from SoftBank, which agreed to pump money into Greensill to cover losses for its investors related to Katerra. SoftBank’s $100bn Vision Fund was an equity investor in both Greensill and Katerra.

A separate administrators report for Greensill’s Australian parent company shows that SoftBank provided $440m of funding to the supply-chain finance firm in November.

A circular financing arrangement whereby SoftBank quietly funded struggling Vision Fund companies through Credit Suisse’s supply-chain finance funds drew scrutiny last year, prompting a review from the Swiss bank.

Greensill’s founder, Lex Greensill, and former British prime minister David Cameron, who acted as an adviser to the finance firm, are due to appear before the UK’s Treasury select committee next week to answer questions about the company’s lobbying of government.

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