Lenders put pressure on Gupta’s empire
Major lenders to Sanjeev Gupta's conglomerate have sought meetings with the industrialist to discover whether his exposure to collapsed lender Greensill Capital sparked a material adverse change clause on their own loans, heaping further pressure as he seeks to refinance at least $US5bn ($6.5bn) in Greensill debt.
Mr Gupta owes up to $2bn to lenders and bondholders globally on top of funds owed to Greensill, according to sources, underlining the scale of debt incurred as he pursued manufacturing deals across a string of locations.
Several of the lenders have sought talks with Mr Gupta's GFG Alliance, with a number of financing agreements incorporating either cross default or material adverse change clauses which if invoked can entitle the lender to recall part of their loan.
The lenders had been probing whether either condition had been triggered by the collapse of Greensill, sources said, potentially putting more pressure on Mr Gupta's international empire.
There has been concern since Greensill took security over Mr Gupta's shares in Liberty Holdings Australia and Liberty InfraBuild - which own the most profitable sections of GFG's Australian businesses.
While the immediate focus remains on refinancing the Greensill debt, the scale of debt that needs to be repaid to other big-name lenders illustrates the potential cashflow crunch should Greensill contagion spread into Mr Gupta's operations.
GFG declined to comment.
A temporary repayment standstill is still being negotiated between Greensill administrators Grant Thornton and GFG, although sources said any pact would only be in place briefly.
Pressure ratcheted up again this week after US coal miner Bluestone Resources revealed a close relationship with GFG and Greensill, saying the financier "emphatically encouraged" Bluestone to enter a "customer relationship" with Mr Gupta's group.
Bluestone - which borrowed $US850m from Greensill - is now suing the financier over alleged fraud in a federal court in New York, with the lawsuit naming Greensill founder Lex Greensill and Roland Hartley-Urquhart, a senior Greensill executive who handled the deal with Bluestone, as defendants.
Bluestone said Greensill even urged them to continue to do business with GFG when Bluestone raised concerns over delayed payment for metallurgical coal to GFG and broader queries about the credit risk of Mr Gupta's group.
Bluestone's court filing provides a glimpse into the months leading into Greensill's collapse, with Bluestone alleging that Greensill sought to blame it for a late payment to Credit Suisse, which Greensill owed $US140m.
"Defendants had failed to make a payment to Credit Suisse and a payment from Bluestone was needed in order for defendants to pay Credit Suisse," Bluestone said in its court filing.
"While Bluestone had made each of its payments on time, and particularly made a payment to Greensill days prior, defendant Mr Hartley-Urquhart asked Bluestone to wire money to cover Greensill's missed payment directly to Credit Suisse, so that Greensill could blame Bluestone for its own late payment."
Bluestone said that its representatives met with Mr Hartley-Urquhart on February 20 at White Sulphur Springs in West Virginia and "demanded Bluestone pay $US300 million by the end of the third quarter 2021".
"Thereafter, on February 26 Mr Hartley-Urquhart approached Bluestone to demand repayment by Bluestone of $US850 million by the end of third quarter 2021.
"On March 1 (Bluestone) received a telephone call from Mr Hartley Urquhart, which he returned with Bluestone's financial adviser also on the call. On the return call, Mr Hartley-Urquhart informed Bluestone both that Greensill Capital had collapsed and that Mr Hartley-Urquhart would be leaving the company."
Recriminations have began inside Lex Greensill's fallen $US7bn financial empire, with one executive questioning why the global financier's leader had "no plan B, C", while another has said the demise has triggered a "collective sigh of relief".
Originally published as Lenders put pressure on Gupta's empire