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Lochaber smelter owner faces court battle with lender

Sanjeev Gupta has faced crisis after crisis since the collapse last year of its lender Greensill Capital
Sanjeev Gupta has faced crisis after crisis since the collapse last year of its lender Greensill Capital

Owners of the UK’s last aluminium smelter are facing legal action as lenders take them to a UK court.

GFG Alliance, which acquired the 90-year old smelter and its hydropower plant from mining giant Rio Tino in a £330 million deal in 2016, is facing insolvency hearings in a UK court this week.

The aluminium smelter, which is at the foot of Ben Nevis, is fuelled by a hydro-electric power station. Photo Sandy Young/PA Wire

The international conglomerate controlled by tycoon Sanjeev Gupta has faced crisis after crisis since the collapse last year of its lender Greensill Capital, which had had lent GFG, which stands for Gupta Family Group, companies as much as £3.5 billion.

Following police raids at his company’s offices in recent weeks — as well as a breakdown in negotiations with his main creditor, Credit Suisse — the fate of swaths of Mr Gupta’s UK business now possibly rests in the hands of a British judge.

Credit Suisse investors are owed more than $1 billion (£812.7m) by GFG, which borrowed money from failed supply chain lender, Greensill.

US investment bank Citigroup — which is acting on behalf of Credit Suisse — filed applications in London’s insolvency court against some of Mr Gupta’s commodities and industrial businesses last March.

‘Positive progress’

In a statement GFG insisted its businesses were performing well.

It said: “Our core international businesses continue to generate strong returns and achieve record production levels.

“We remain committed to repaying all creditors and continue to make positive progress toward a consensual debt restructuring that’s in the best interest of all stakeholders.”

Pressure grows

Its acquisition of the aluminium smelter business and its associated hydro scheme, which included a 14,000-acre estate that takes in part of Ben Nevis, has come under scrutiny after it emerged the 2016 deal was underwritten by a £586 million Scottish government guarantee to buy energy from the hydro plants.

His firm Liberty Steel also owns steelworks in Scotland at Dalzell and Clydebridge.

Sanjeev Gupta, executive chairman of Liberty House, and Nicola Sturgeon. Photo Peter Devlin

Last week an investigation was launched into the accountancy firm responsible for signing off the accounts for a range of entities in the steel tycoon’s business empire.

The Financial Reporting Council (FRC), which regulates the accounting industry, said it would be investigating accounts signed off by King and King for four Liberty Steel businesses, including that which controls the smelter.

The FRC said it would be combing through accounts relating to Liberty Speciality Steels Limited, Alvance British Aluminium Limited (formerly Liberty Aluminium Lochaber Ltd) and Liberty Steel Newport Limited for the year ended March 31 2019.

Greensill collapse

The collapse of Greensill prompted the Serious Fraud Office (SFO) to launch an investigation into “suspected fraud, fraudulent trading and money laundering” at GFG, raising concerns for the future of its 35,000-strong worldwide workforce, including 3,000 in the UK.

Last month investigators from the SFO descended on sites connected to GFG and demanded documents in relation to the agency’s probe.

Days earlier, French police had searched GFG properties, including its Paris offices and an aluminium smelter in Dunkirk, as part of investigation by the Paris prosecutor’s office into alleged misuse of corporate assets and money laundering.

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