Credit Suisse moves to liquidate Whyalla steel mill, Tahmoor Coal

Investment bank Credit Suisse has launched legal action that could potentially put the Whyalla steel mill and other steel assets owned by billionaire tycoon Sanjeev Gupta into liquidation.

Citigroup has filed an application on behalf of Credit Suisse in the New South Wales Supreme Court seeking to wind up two entities that are a part of Mr Gupta’s Australian business empire over debts associated with failed financier Greensill Capital.

Sanjeev Gupta standing outside one of the OneSteel mills he bought in 2017.
Sanjeev Gupta standing outside one of the OneSteel mills he bought in 2017.Credit:Bloomberg

The wind up application includes consent from McGrathNicol for it to act as liquidator over two companies owned by Mr Gupta, including OneSteel Manufacturing, the entity that owns the Whyalla steel mill in South Australia, and Tahmoor Coal, which owns a coking coal asset on the east coast of Australia.

A first hearing for the application will be on May 6. If successful the entities that own the Whyalla and the Tahmoor coal asset will fall into liquidation – an outcome feared by the unions covering more than 6,000 workers across both business.

The NSW Supreme Court action follows a similar winding up application in London on behalf of Credit Suisse that was also filed by Citigroup. Citigroup is the trustee of Greensill’s bonds which were part of Greensill’s complex financing arrangements with Credit Suisse.

Credit Suisse declined to comment on the winding up application. Mr Gupta’s companies were the largest client of Greensill and since the financier’s collapse last month there have been ongoing concerns about the financial viability of Mr Gupta’s business empire.

Greensill, which specialises in a controversial service known as supply chain financing, collapsed after its key backer Credit Suisse withdrew financial support after Greensill’s Australian insurers at Insurance Australia Group (IAG) refused to renew insurance over $10 billion of trade credit.

Greensill’s fallout has also seen its German-registered bank Greensill Bank hit with criminal charges by Germany’s corporate regulator BaFin and revelations local councils around Germany were exposed to Greensill.

McGrathNicol partner Keith Crawford said it would look to keep the business running if it was appointed as liquidator.

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“Upon appointment the liquidators’ immediate focus would be to work constructively with all key stakeholders (including employees, customers, suppliers, unions, creditors, and government) to stabilise operations while undertaking an urgent review of the financial position, trading outlook, and funding requirements of the underlying businesses.”

“As part of this process we will be assessing all options capable of providing long-term going concern outcomes for the businesses,” Mr Crawford said.

The potential liquidation of the entity that owns Whyalla will come just five years after the mill’s former owner Arrium was plunged into administration.

Credit Suisse has already appointed McGrathNicol as a receiver to Greensill’s Australian parent company to recover a bridging loan it provided to Greensill that was secured by shares in the local Greensill company.

Last month, Greensill’s administrators from Grant Thornton told a creditor’s meeting the company could face as much as $5 billion in claims from creditors, including a cohort of German banks, as administrators raised the prospect of the once high-flying group heading into liquidation.

Grant Thornton also indicated at the hearing that Greensill could also be headed for liquidation with no rescue plan being prepared and the sale process already failing to find an appropriate buyer for Greensill’s operating business.

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Source: Thanks smh.com