Greensill files for administration and warns of GFG “ defaults ”

Greensill Capital has filed for administration, warning that it is in “serious financial distress”, unable to repay a $ 140 million loan to Credit Suisse and is facing “defaults” from its main client GFG Alliance .

Greensill’s lawyers appeared in a UK court on Monday in a move that could pave the way for US private equity group Apollo Global Management to buy parts of the ailing company.

The filing marks the latest step in the dismantling of a SoftBank-backed company that requested a valuation of $ 7 billion last year, with a business that spanned the UK and Australia.

Greensill specializes in supply chain finance, where companies borrow money to pay their suppliers. It was put in crisis last week after its main insurer refused to renew a $ 4.6 billion contract and Credit Suisse froze $ 10 billion in funds linked to the company, depriving it of an important source of funding.

Lawyers for Greensill said Monday that the loss of that insurance contract “has caused a real tightening.” They added that Greensill had roughly $ 5 billion in exposure to metals tycoon Sanjeev Gupta’s GFG Alliance group of companies, which “is currently in financial trouble” and has “started to default” on its obligations to Greensill.

According to court documents, GFG said in a February 7 letter that if Greensill stopped providing it with working capital, it would go into insolvency.

GFG declined to comment.

Lawyers for Greensill told the court that Credit Suisse, citing “events of default,” demanded repayment of a $ 140 million loan it made to Greensill in October. Lawyers said Greensill had “no conceivable way” of paying him back.

The court hearing provided the most detailed account of Apollo’s attempts to acquire viable parts of Greensill Capital. The deal is unlikely to generate returns for shareholders of Greensill Capital, like SoftBank’s Vision Fund, which paid $ 1.5 billion into the company in 2019.

Apollo has made a cash offer of $ 59.5 million for Greensill’s intellectual property and computer systems, which would involve taking over “the majority” of employees at its UK-based Greensill Capital Management Company, according to court documents. The American group is “the only credible bidder”, according to the documents.

Apollo’s attorney told the court that talks were still ongoing and that there were “still some issues to be resolved” before a deal could be finalized.

As part of a deal, Apollo would not accept any funding for GFG, the industrialist dubbed the ‘savior of steel’ in the UK that used Greensill as its main lender, people familiar with the matter said.

Apollo said on Monday it would merge with Athene, the life insurance company it created at the height of the financial crisis. Two people familiar with the matter said it would not prevent the Greensill deal.

Additional reporting by Sylvia Pfeifer

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