London (AFP)
British workers at Liberty Steel owned by Sanjeev Gupta, one of the world's largest steel empires, face an uncertain future, following news this week of the sale of three factories in the UK.
Once considered the savior of the British steel industry, Indo-British billionaire Sanjeev Gupta is now fighting for the survival of his empire, after suspicion of fraud and the collapse of his main lender, Greensill Capital.
According to the lawyers of this financial company, its disappearance could threaten a total of 50,000 jobs in the world.
Liberty employs 3,000 British workers and its parent company, the GFG Alliance holding company, 35,000 people worldwide.
Sanjeev Gupta had insisted that none of its 12 UK sites would close.
Yet the decision this week to sell three factories in northern and central England has left 1,500 employees in doubt.
Liberty must be a "responsible seller" and find a buyer who "will not just strip assets," said Clive Royston, representative of the Community union at the Liberty site in Stocksbridge, in the north of England.
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"We are worried and we do not have details," he told AFP.
"It's difficult," he said, because the workers "ask questions and I can't answer."
- Liquidity crisis -
Financial firm Greensill has helped GFG expand with short-term business loans, freeing it from the heavy restrictions of traditional banks.
But the abrupt collapse in March of Greensill, which had invested 3.5 billion pounds (4.1 billion euros) in GFG, triggered a liquidity crisis within the parent company.
Since this fall, Sanjeev Gupta has desperately sought new funds to avoid plant closures in its steel branch.
But the case turns out to be tough, while Liberty has still not repaid a loan of 18 million pounds to Metro Bank, which accuses it of having violated "clauses and restrictions".
Liberty is still in negotiations with the bank Credit Suisse, itself exposed to the tune of 10 billion euros with Greensill.
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The British government refused to lend him 170 million pounds, citing the "opaque" nature of GFG.
The risky nature of supporting a struggling business can mean investors can either make huge profits or lose all of their investments, said Dirk Jenter of the London School of Economics.
Pressed by its creditors, Liberty "scrambles to find money and tries to sell its most liquid assets", explains the economist, "an attempt to buy time in order to keep the company alive".
But according to Mr. Jenter, the investigation opened by the equivalent of the financial prosecutor's office against GFG for suspicion of fraud and money laundering will deter potential investors.
"This is a wake-up call. It would take an extraordinarily courageous investor to trust the figures provided by Liberty," he told AFP.
"It makes it almost impossible to take the risk of investing."
- Nationalization "unlikely" -
The Covid-19 had already "paralyzed" the Stocksbridge plant, which supplies the hard-hit aerospace sector, recalled trade unionist Clive Royston.
“There isn't a lot of industry around us. Stocksbridge was built around the factory,” he argues, stressing the need to protect these jobs that define the region.
Broadly speaking, the entire UK steel industry faces big challenges, such as rising electricity prices and corporate tax rates, puts economist David Bailey of the university in perspective. from Birmingham.
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A long-standing surplus in the global steel market and competition from China have also weakened British steelmakers.
But the crisis that Liberty is going through is due to "more structural problems", believes the researcher: "they were too dependent on Greensill when she went bankrupt and found themselves too exposed".
Mr Bailey believes the UK government should intervene through an American-style trusteeship, where the state manages and reforms businesses before handing them over to the private sector, to prevent damage in related industries .
But British Secretary of State for Business Kwasi Kwarteng recently told MPs that nationalization was "unlikely".
© 2021 AFP