In response to concerns raised by an insolvency filing by one of its financial backers, GFG Alliance leader Sanjay Gupta said his firm is in discussions with its administrators regarding an agreement to pause payments to the troubled firm.
On Friday, Gupta relayed internally that it was seeking a standstill agreement from Greensill Capital’s administrators, which would allow GFG and Greensill to come up with an agreed-upon time for the suspension of payments as well.
“We are also having constructive discussions with Greensill’s administrators … negotiating a formal standstill agreement,” Gupta announced in an internal message provided to Reuters late last week.
A stand-still agreement “would put on hold arrangements between the two parties and allow both sides more time to assess and negotiate next steps,” continued Gupta.
In the interim, GFG Alliance had sufficient capital to continue, he advised trade and labor groups last week. But the firm continues to seek new funding for the long term, Gupta noted.
“On refinancing, we are enthused by the amount of offers that we have received that reflects the strength of our business. However, given the scale of our operations this process will take some time to organise.”
Gupta went on to say that all its businesses would “take prudent steps to manage their cash positions carefully” while Greensill refinanced.
Gupta spoke in response to a statement made in Greensill’s insolvency filing that GFG Alliance would itself become insolvent if Greensill’s backing did not continue.
GFG Alliance owns several steel and aluminium plants throughout Europe. It manages plants in Scotland, Belgium, and France (including Europe’s biggest aluminium smelter at Dunkirk) under its affiliate Alvance.