UK Government To Take Control Of Sanjeev Gupta Steel Assets
Gupta and his companies have struggled ever since their major funder, Greensill Capital, collapsed into insolvency in 2021.
The UK took control of one of the country’s largest steelworks after a firm owned by the beleaguered tycoon Sanjeev Gupta was forced into liquidation.
A London judge ordered that Speciality Steel UK Ltd., which employs around 1,500 people in Yorkshire, should be put into liquidation on Thursday. The judge approved the government appointment of special managers to continue running the business. It will also provide the funding to keep the firm, which is losing around £9 million ($12.1 million) a month, afloat.
“It is quite plain that the company is hopelessly insolvent,” Judge James Mellor said on Thursday. He said that it would be “preferable” for a winding up order to be made with the backing of the government.
Lawyers for Gupta were seeking a four-week delay to complete a funding deal and said it was negotiating with BlackRock Inc. and distressed-specialist fund Fidera Group in an attempt to buy out his firm from administration.
The court rejected the company’s plan that would have seen the firm’s assets sold back to its current owners through a pre-pack administration. The court decided instead to issue a winding up order and place the company into liquidation. Speciality Steel is part of Gupta’s GFG Alliance.
The special managers will be staff at Teneo Inc. who will run the firm while a more permanent solution is sought.
A GFG official said the company intends to “advance its bid” for the business. He called the judge’s decision “irrational,” saying liquidation will “impose prolonged uncertainty and significant costs on UK taxpayers.”
GFG’s other UK business interests remain unaffected, according to the statement.
Greensill Collapse
Gupta and his companies have struggled ever since their major funder, Greensill Capital, collapsed into insolvency in 2021. Since then, many GFG assets have been faced with insolvency proceedings initiated by creditors seeking to be repaid what they are owed, including various Greensill entities.
An Australian steelworks owned by Gupta was taken over by the government in February with a A$2.4 billion ($1.5 billion). GFG has been the subject of a Serious Fraud Office investigation since 2021.
“The GFG Alliance is in severe financial distress. At the time of writing, at least 15 entities in the GFG Alliance are subject to formal insolvency or restructuring proceeding,” lawyers for the administrators of Greensill said in written arguments prepared for Thursday’s hearing.
Speciality Steel produces steel components for the aerospace and energy industry from a number of plants in northern England. Gupta purchased the business from Tata in 2017 for £100 million.
It was just one in a spate of takeovers in the UK, including a £330 million aluminum smelter in Scotland, two pipe mills and a plate-making facility.
For the then Conservative government worried about a steel industry that was struggling to cope with high energy costs and a wave of cheap exports from China, Gupta’s takeover offers were a godsend, rescuing them from the politically damaging prospect of thousands of job losses.
Speciality Steel was in a relatively strong position compared to the rest of the steel industry — supplying specific components to niche industries meant they were less exposed to the downward pressure on prices coming from booming Chinese production. But even large chunks of that business has become increasingly mothballed.
Closing Speciality Steel’s plants would be a bitter blow to the UK’s beleaguered steel industry, which this year saw the Labour government step in and prevent the closing of the country’s last primary steelmaker.
