On behalf of Switzerland-based Credit Suisse, UK-based Citibank, part of US-based financial services group Citigroup, has filed an insolvency application in an Australian court against OneSteel Manufacturing in Whyalla, Australia, and Tahmoor Coal in New South Wales, Australia, owned by UK-based global industrial leader GFG Alliance, according to media reports.
Credit Suisse has claimed that it indirectly provided funding to GFG through UK-based financial services company Greensill Capital which has gone bankrupt. On the contrary, Sanjeev Gupta, owner of GFG Alliance, stated that the businesses did not source any financing from Credit Suisse and that this move will put more than 1,000 jobs at risk if the Whyalla plant is closed down.
GFG Alliance acquired Whyalla steel plant in 2017 following the collapse of the previous owner, Australia-based Arrium. According to the acquisition deal, the Australian government was going to finance the renewal of the mill with a loan of $50 million: however, the government stipulated not using the loan for the company’s debt as a condition.
“The Australian businesses are performing well and generating positive cash flow, supported by the operational improvements we’ve made and strong steel and iron ore markets,” Mr. Gupta stated, adding, “I’m ready to change. So is the GFG Alliance. We understand that the way we used to finance our operations needs to be overhauled, and we will address our challenges head on,” he added.
The UK government rejected the company’s request for £170 million in financial support. Some of the UK steel businesses of UK-based Liberty Steel, a part of GFG Alliance, were operating intermittently, and recently the company resumed partial production at its Rotherham plant in northern England, as SteelOrbis previously reported.