The Financial Times reported the outline deal with creditors could see them recoup less than half the amount initially lent to Liberty Steel, part of GFG Alliance, and would allow the metals group to fend off insolvency proceedings due to take place this month.
A maximum of 55 per cent of what creditors are owed could be recouped. However, reports stated there was an expectation it would be significantly less than that figure.
The Serious Fraud Office continues to investigate Sanjeev Gupta’s GFG Alliance companies around fraud and money laundering suspicions, allegations which the conglomerate has always denied.
This announcement is the latest from Mr Gupta following the past 18 months of attempting to refinance and fend off looming legal action against him linked to unpaid bills following the collapse of one of GFG Alliance’s main funders, Greensill Capital.
That collapse increased attention on the Scottish Government’s decision to enter into a £586 million guarantee with Liberty Steel, which it used to finance to purchase of the ailing Lochaber smelter, near Fort William. The deal has been mired in controversy in Holyrood, with opposition politicians pushing for answers as to the advice around the deal and whether it is value for taxpayers’ money.
Ministers have repeatedly refused to answer any substantive question on the detail, citing commercial confidentiality. However, deputy first minister John Swinney and business minister Ivan McKee have been kept up to date with the ongoing refinancing efforts of Liberty Steel through regular meetings with Mr Gupta and Jeff Kabel, the firm’s chief transformation officer.
A Scottish Government spokesperson refused to say what the impact of the agreement was on the Lochaber business and refused to expand on what the deal meant in terms of the impact on the Government’s finances.
The spokesperson said: “The agreement in principle between Liberty Steel Group and its creditors on global debt restructuring is a welcome milestone for the business.
“There continues to be no call on the Lochaber guarantee and Scottish Government continues to receive all commercial guarantee fee payments. The Scottish Government remains in regular dialogue with GFG and will continue to monitor developments.”