LONDON (Reuters) - GFG Alliance head Sanjeev Gupta said on Friday the conglomerate was in talks with administrators of its former financial backer Greensill Capital on a so-called standstill agreement.
A standstill deal would mean GFG could pause its debt payments to Greensill, which filed for insolvency this week, for an agreed period of time.
In its insolvency filing this week Greensill said that GFG, which is its largest client, warned in February that it would “collapse into insolvency” if the supply chain finance firm stopped providing it with working capital.
“We are also having constructive discussions with Greensill’s administrators ... negotiating a formal standstill agreement,” Gupta said in an internal message to workers made available to Reuters by GFG.
Greensill’s administrators at Grant Thornton declined to comment on the standstill discussions.
Such an agreement, Gupta said, “would put on hold arrangements between the two parties and allow both sides more time to assess and negotiate next steps”.
GFG, an umbrella company for tycoon Gupta’s network of steel, aluminium and energy companies, told trade unions this week it had adequate financing to meet its current requirements, but was seeking long-term alternatives.
“On refinancing, we are enthused by the amount of offers that we have received that reflects the strength of our business,” Gupta said. “However, given the scale of our operations this process will take some time to organise.”
GFG was asking all its businesses to “take prudent steps to manage their cash positions carefully” during the refinancing process, Gupta added.
Reporting by Eric Onstad additional reporting by Abhinav Ramnarayan; Editing by Edmund Blair and Alexander Smith
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