Business secretary Kwasi Kwarteng did not rule out nationalising the steel plants owned by Sanjeev Gupta’s under-pressure business empire, but of all the options on the table it is “the least likely.”
Less than 24 hours after Liberty Steel’s parent, GFG Alliance, said it plans to stave off problems sparked by the collapse of a major lender with a new refinancing deal, Mr Kwarteng said that there will likely be interest in the plants.
“The issue that Liberty had was to do with financial engineering, the opaque bit, if you like, of GFG, the leverage, the finance, the debt they had incurred … Without that I think there is a healthy interest in the assets and I think they have a viable future,” the minister told MPs on the Business, Energy and Industrial Strategy Committee on Tuesday.
“I don’t rule anything in or out, but I think that nationalisation – of all the options – is the least likely,” he said.
On Monday, GFG Alliance, the group behind Mr Gupta’s empire, said that it had held crunch talks with Credit Suisse, a key lender, in Dubai over the weekend.
The bank has an exposure of about 200 million dollars (£141 million) to GFG in Australia, the Financial Times reported.
Mr Gupta is also looking for a buyer for several UK plants, which together employ more than 1,500 people.
It is a major step for his plans to refinance the business, which was thrown into turmoil after the collapse of Greensill Capital which helped finance Mr Gupta’s expansion across the world.
The Serious Fraud Office is now investigating GFG and some of its links to Greensill.
On Monday, the Bank of England governor, Andrew Bailey, revealed that Wyelands Bank, which is part of GFG, was probed by the Bank as early as 2019.
Mr Kwarteng said that the complex corporate governance of GFG meant that officials at the Department for Business, Energy and Industrial Strategy had declined GFG’s request for Government support.
Yet £46 million was provided in Government-backed Covid loans to the GFG through the CBILS and CLBILS loans schemes, which were administered by the British Business Bank.
“I think that the British Business Bank was clearly under a lot of pressure to disperse loans,” Mr Kwarteng said.
“What subsequently occurred is that the Bank of England now has concerns about Wyelands Bank, which it didn’t have last year when decisions about the CBILS and CLBILS were being made.”