It was a difficult weekend for Kwasi Kwarteng (still the Government's only alliterative Minister) as he held emergency meetings with Jon Ferriman, the boss of Liberty Steel UK. Liberty is owned by the GFG Alliance, part of Sanjeev Gupta's 'steel empire' and they, in turn, are financially backed by Greensill Capital (are you still with us?). Anyway, the long and the short of it is Greensill are seriously knackered, which puts this part of an already very troubled steel sector in serious trouble.
Gupta's companies owe Greensill around £3.6 billion, which is a lot, certainly enough to tip them into Administration, with Grant Thornton at the insolvency helm. GFG said in February that it would collapse into insolvency if Greensill stopped providing it with working capital, taking with it the threat of the loss of between 3,000 and 5,000 jobs as well as satellites of jobs and businesses that revolve around the steel communities.
The private-equity firm Apollo Global Management is expected to cherrypick the best of Greensill assets out of Administration. However, this could generate as little as £43 million, which is a splatter of mud on the back of a warthog which, in 2020, valued itself at £5.5 billion. Greensill is known for allowing businesses to borrow money to pay their suppliers, but has been 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 pile of loans issued to GFG Alliance. The Bank of England and the European Central Bank have been put on red alert and have been spied loading pods onto Thunderbird 2. In particular, the Bank of England's Prudential Regulation Authority, 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.
A Government spokesperson said something generic about 'supporting businesses throughout the pandemic and continuing to do so' and Sarah Champion for Labour, who serves as shadow minister for business and consumers and represents the constituency of Rotherham where much of the effect of a collapse of Liberty Steel would be felt, said something like 'the Government must not ignore people in need', clearly having just emerged from a 12 month coma.