Simec Atlantis Energy (SAE) enjoyed a recovery in its share price after it confirmed its majority owner had wrested back control of its stake in the business from the clutches of receivers.
SAE said GFG Alliance, the group controlled by controversy-struck industrialist Sanjeev Gupta, has “confirmed that they are in control” of Simec UK Energy Holdings (SUEH), which owns a majority stake in the listed company.
In its statement, SAE said it “understands that this matter is now closed and looks forward to a more stable relationship with its major shareholder”.
It added: “SAE is an independent company, whose focus remains the delivery of its world leading projects, which can play a critical role in the journey to net zero.”
SAE shares closed more than 80% higher on the news having lost significant value since GFG’s woes began earlier this year.
Crisis-hit GFG, headed by entrepreneur Mr Gupta, owns 41% of SAE, the company confirmed.
In May, GFG informed SAE it had started legal proceedings over the appointment of receivers in the British Virgin Islands, where SUEH is registered, to “challenge the validity” of the move.
On Friday, SAE, which owns the MeyGen tidal project in the Pentland Firth, said it had received confirmation from GFG that “the receiver’s appointment has ceased” and “the receivers have resigned as directors of SUEH”.
GFG’s involvement with SAE started in December 2017 when SUEH was handed a stake of just under 50% in exchange for the Uskmouth coal power plant by Newport in Wales.
However, the wider GFG Group which also owns Fort William aluminium smelter still has challenges to face.
In May the Serious Fraud Office (SFO) announced it was launching an investigation into GFG Alliance, which is focused on suspected fraud, fraudulent trading and money laundering, including its financing arrangements with failed company Greensill Capital UK.
Nevertheless, business secretary Kwasi Kwarteng earlier this week told MPs he believes Mr Gupta’s company GFG Alliance could raise the funds to save the business, which also includes Liberty Steel, despite concerns over poor corporate governance and opaque financing.
But, he added, contingency plans are being drawn up should the Government need to step in.
Mr Gupta previously asked the Government for a £170m grant in March to support Liberty Steel, but this was rejected due to concerns the money would be used to pay down debts at GFG rather than through reinvestment in the steel business.
Liberty Steel, one of the business groups under the GFG Alliance, has a number of plants around the UK, including in Yorkshire, on Teesside and in Dalzell and Clydebridge in Scotland. It employs around 200 at Liberty Steel Newport and Liberty Steel Tredegar.
Across the UK Mr Gupta’s firms employ 5,000 and 30,000 globally.
The Uskmouth Power Station is also seeking to raise investment to move to biomass energy generation to supply the adjoining Liberty Steel Newport plant, where last year it announced 70 redundancies.
Taking questions from the BEIS select committee, Mr Kwarteng said: “If for whatever reason the refinancing doesn’t work out we have options… we are considering options of how we can take things forward.”
The minister added: “I’ve always said that we’ve got to wait and see what happens because the nature of the collapse of the financing, the nature of the state of the business is actually in will determine Government’s action.
“It could well be that there’s another buyer and that’s something we would have to investigate.”
He also explained that a commitment had been made to allow GFG to continue to run the business, saying: “Even though GFG and the Gupta family group had financial difficulties, if Mr Gupta could refinance those assets it’s only right for us to give him the chance to do that… to intervene now would breach that commitment.
“Previously £170 million was asked for from the Government, which was rejected.
“He said he wants to find private financing with his lenders and we have to see that process through.”
