The owner of Liberty Steel is in talks with the US lender White Oak Global Advisors over a refinancing deal, UK media reported Monday.
GFG, the metals group run by Sanjeev Gupta, has been seeking new funds since its key lender, Greensill Capital controversially collapsed into administration in March.
Gupta is struggling to keep his metals empire afloat amid a criminal investigation and drawn-out legal disputes with Greensill’s backers.
GFG’s financial troubles have cast a shadow over the Liberty Steel plants in the UK, which have been operating intermittently for months to earn money needed for day-to-day operations such as buying raw materials for processing.
San Francisco-based White Oak in May stepped in to lend to GFG’s steel and coal operations in South Australia.
The US lender was previously in talks with Gupta over a loan potentially worth £200m for Liberty Steel UK, but initially said it would walk away from the deal after Britain’s Serious Fraud Office announced an investigation into suspected fraud and money laundering at GFG companies.
The investigation has not finished, although GFG has denied any wrongdoing and has said it would work with investigators.
The Guardian newspaper cited two unnamed sources as confirming that talks on refinancing GFG’s European operations, first reported by the Financial Times, were continuing. One person said GFG was in the middle of several conversations over refinancing.
White Oak specialises in asset-backed lending that would have typically been carried out by banks in the past. Private finance firms typically charge much higher interest than banks to compensate for higher risk.
Greensill Capital collapsed after its main insurer pulled coverage and refused to cover the loans the firm was making, leading to thousands of job losses.
Former UK prime minister David Cameron came under the spotlight when it was found that he aggressively lobbied senior ministers on behalf of the firm to get access to government loans under the Covid Corporate Financing Facility, which saw the Bank of England buy billions of pounds worth of bonds in investment grade companies in a bid to increase liquidity during the pandemic.
Cameron sent dozens of emails, texts and WhatsApps to senior civil servants in the Treasury and Bank of England as well as cabinet ministers to lobby on behalf of Greensill Capital in April last year. This included to chancellor Rishi Sunak and Cabinet Office minister Michael Gove.
