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UK denies financial aid to Liberty Steel

Europe / Business and Finance

Government officials fear that £ 170 million requested by Sanjeev Gupta will go towards paying off debts in other countries and have hinted that the house in London, bought by his wife, is worth about £ 50 million.

UK denies financial aid to Liberty Steel

Fears about the future of Liberty Steel and several thousand UK jobs have risen after the government rejected company request for emergency assistance in the amount of £ 170 million.

The rejection increased pressure on Liberty Steel, part of a business empire created by industrialist Sanjeev Gupta. In recent weeks, the company has been trying to find additional funding for its business following the collapse of its key financial partner, Greensill Capital.

However, government officials have drawn up an intervention plan to keep Liberty Steel's factories operational should it be forced to go into bankruptcy and overseas management. Options under consideration include a strategy similar to the one used to bail out British Steel in May 2019, when an official recipient, a government employee, took control of the company while it looked for a buyer for the distressed asset.

According to The Guardian, the government denied the loan because ministers had concerns about the opaque corporate structure used by the GFG, as well as about whether the money from UK taxpayers would go to finance operations in other countries.

Kwasi Quarteng, a business secretary, told parliament on Thursday that the government is "looking at all options to see what we can do" to secure the future of Liberty Steel, and said the government hopes to keep it "completely." /p>

However, it is believed that ministers will not intervene until operations are outsourced to an external administration. The corporate structure of GFG complicates any rescue, as there are several commercial organizations operating at 14 UK sites.

Greensill Capital, which funded the Gupta empire, was founded by Lex Greensill, an Australian banker who worked closely with the government when David Cameron was prime minister. The Sunday Times first reported that Australians had access to as many as 11 government departments and agencies to offer the supply chain financing mechanisms that would later become the hallmark of Greensill Capital.

“The government has been very supportive of the steel sector, including over £ 500 million in energy costs in recent years. Our unprecedented Covid support package remains available to the sector to protect jobs and ensure producers the support they need during this challenging time, ”a UK government spokesman told the press.

The GFG Alliance has yet to comment on negotiations with the government or Greensill administrators.

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