Sanjeev Gupta has urged colleagues in his GFG Alliance empire to cut the fat in their businesses, after the group was sent reeling by the collapse of Greensill Capital.
In an email sent to staff yesterday, seen by the Mail, the steel tycoon warned there would be ‘less group support’ available now its major backer Greensill had tumbled into administration.
Financial services firm Greensill, run by Gupta’s friend Lex Greensill, was a major lender to the loosely connected group of businesses known as the GFG Alliance.
Stoking the flames: Financial services firm Greensill, run by Sanjeev Gupta’s friend Lex Greensill, was a major lender to the group of businesses known as the GFG Alliance
It fell apart this week after its insurer refused to renew a vital policy, meaning Greensill would be on the hook for huge losses if any of its customers failed to repay their debt.
Greensill’s backers, including Credit Suisse and asset manager GAM, abandoned the lender – leaving it insolvent. Its collapse has raised fears over the future of businesses in Gupta’s GFG, which relied heavily on Greensill for cash. Firms which are part of GFG include Liberty Steel, Britain’s third largest steel maker with around 3,000 employees at 11 sites.
In a message to colleagues yesterday, 50-year-old Gupta said GFG was in a ‘challenging situation which requires careful management’. He added: ‘We are asking all of our businesses to take prudent steps to manage their cash positions carefully and reduce their call on group resources.’
Gupta added that he would be ‘working around the clock to ensure our people and communities have a sustainable future.’
- Private equity giant Apollo Global Management called off talks to buy parts of Greensill last night. The £44m rescue deal was never set to include any of the GFG loans.
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