Liberty Steel nationalisation 'an option' to save jobs - BBC News

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The government has restated it is considering "all options" to keep Liberty Steel's UK plants and jobs afloat, including nationalisation.

On Sunday, the government rejected a request for £170m in financial support for the firm.

But that is due to concerns about the "very opaque" structure of its owner GFG, a minister said.

Business Secretary Kwasi Kwarteng said the government could not put money into a "black box".

Mr Kwarteng told the BBC's Today programme that Liberty Steel was "an important national asset" but that the structure of its owner - Gupta Family Group (GFG) - was "very opaque" and "not helpful".

"We are custodians of taxpayer's money... and we feel that if we gave the (£170m) money, there was no guarantee that the money would stay in the UK, and would protect British jobs," he said.

• 'If the steelworks shuts it will destroy Rotherham'
• Liberty Steel: Government looking at 'all options'

Liberty Steel's founder, Sanjeev Gupta, is trying to refinance GFG after its key financial backer Greensill Capital filed for insolvency earlier this month.

Mr Kwarteng said he wanted to see Mr Gupta's plans "work through" before the government took any further action.

There are about 3,000 staff directly employed at Liberty's UK sites, which include Rotherham, Motherwell and Newport, and a further 2,000 jobs at GFG Alliance in the UK.

The £170m request was made for working capital for Liberty Steel plants.

Mr Gupta's empire employs 35,000 people worldwide.

GFG Alliance said most of its businesses around the world "are performing well and generating positive cash flow, supported by the operational improvements we've made and strong steel, aluminium and iron ore markets."

"We are taking prudent steps across our global portfolio to manage resources while we try to negotiate a formal standstill agreement with Greensill's administrators and refinance the businesses.

"In the UK, GFG Alliance has invested significantly to rescue steel and aluminium plants saving thousands of jobs in industrial communities across the United Kingdom, that would have otherwise been lost."

The GFG spokesperson added that Liberty Steel had been hit by the coronavirus crisis due to a drop in demand for aerospace products compounded by energy prices.

The company plans to restart steelmaking in the UK around the 6 April.

Green plans

Mr Kwarteng said "all options are on the table" to keep Liberty Steel jobs and plants going, including nationalisation.

"We think that the steel industry has a future in the UK," he said.

The UK's industrial decarbonisation strategy means the government wants to see "clean steel" produced, he said.

"Electric arc furnace-produced steel of the kind that Liberty makes - we think that has a future in the UK," Mr Kwarteng said.

He said that while the future of the steel market is "uncertain", the government's "net zero" carbon plan "has changed the dynamics in terms of the government's relationship to parts of the economy."

Alasdair McDiarmid, operations director at the Community union, said options open to the government included directly supporting the business, facilitating a takeover as happened with British Steel, or nationalisation.

He said it was "far from clear how a nationalisation of Liberty Steel would work or what the costs of that would be to the taxpayer".

"Liberty Steel is a very complicated organisation with lots of different entities, all loaded with millions if not billions of debt, and mortgaged to the hilt with many different creditors having a call on different parts of the business.

"It seems to us that the first option to look at would be whether the business can be supported as is, because that would be likely to be the least disruptive, and probably the least costly to the taxpayer," Mr McDiarmid added.

Steel industry analyst Kathryn Ringwald Wildman said GFG had "found a difficult patch" in their finances after the Greensill collapse which meant they were no longer able to service their debts.

Both companies were now in "a very precarious position" she said, with GFG finding it "quite difficult" to find alternative sources of funding due to how much debt it has, the complexity of its structure, and the future of the steel market.

"All three of the major steel companies in the UK are hoping to secure government funding for the medium to long-term development of the industry," she said.

"It is extremely difficult for the company at the moment even though they have been a model of steel-making in the industry."

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2021-03-30 11:55:36Z
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Liberty Steel nationalisation 'an option' to save jobs - BBC News

PA Media

The government has restated it is considering "all options" to keep Liberty Steel's UK plants and jobs afloat, including nationalisation.

On Sunday, the government rejected a request for £170m in financial support for the firm.

But that is due to concerns about the "very opaque" structure of its owner GFG, a minister said.

Business Secretary Kwasi Kwarteng said the government could not put money into a "black box".

Mr Kwarteng told the BBC's Today programme that Liberty Steel was "an important national asset" but that the structure of its owner - Gupta Family Group (GFG) - was "very opaque" and "not helpful".

"We are custodians of taxpayer's money... and we feel that if we gave the (£170m) money, there was no guarantee that the money would stay in the UK, and would protect British jobs," he said.

• 'If the steelworks shuts it will destroy Rotherham'
• Liberty Steel: Government looking at 'all options'

Liberty Steel's founder, Sanjeev Gupta, is trying to refinance GFG after its key financial backer Greensill Capital filed for insolvency earlier this month.

Mr Kwarteng said he wanted to see Mr Gupta's plans "work through" before the government took any further action.

There are about 3,000 staff directly employed at Liberty's UK sites, which include Rotherham, Motherwell and Newport, and a further 2,000 jobs at GFG Alliance in the UK.

Mr Gupta's empire employs 35,000 people worldwide.

Green plans

Mr Kwarteng said "all options are on the table" to keep Liberty Steel jobs and plants going, including nationalisation.

"We think that the steel industry has a future in the UK," he said.

The UK's industrial decarbonisation strategy means the government wants to see "clean steel" produced, he said.

"Electric arc furnace-produced steel of the kind that Liberty makes - we think that has a future in the UK," Mr Kwarteng said.

He said that while the future of the steel market is "uncertain", the government's "net zero" carbon plan "has changed the dynamics in terms of the government's relationship to parts of the economy."

Alasdair McDiarmid, operations director at the Community union, said options open to the government included directly supporting the business, facilitating a takeover as happened with British Steel, or nationalisation.

He said it was "far from clear how a nationalisation of Liberty Steel would work or what the costs of that would be to the taxpayer".

"Liberty Steel is a very complicated organisation with lots of different entities, all loaded with millions if not billions of debt, and mortgaged to the hilt with many different creditors having a call on different parts of the business.

"It seems to us that the first option to look at would be whether the business can be supported as is, because that would be likely to be the least disruptive, and probably the least costly to the taxpayer," Mr McDiarmid added.

Steel industry analyst Kathryn Ringwald Wildman said GFG had "found a difficult patch" in their finances after the Greensill collapse which meant they were no longer able to service their debts.

Both companies were now in "a very precarious position" she said, with GFG finding it "quite difficult" to find alternative sources of funding due to how much debt it has, the complexity of its structure, and the future of the steel market.

"All three of the major steel companies in the UK are hoping to secure government funding for the medium to long-term development of the industry," she said.

"It is extremely difficult for the company at the moment even though they have been a model of steel-making in the industry."

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2021-03-30 11:09:12Z
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Liberty Steel nationalisation 'an option' to save 5,000 jobs - BBC News

PA Media

The government has restated it is considering "all options" to keep Liberty Steel's UK plants and jobs afloat, including nationalisation.

On Sunday, the government rejected a request for £170m in financial support for the firm.

But that is due to concerns about the "very opaque" structure of its owner GFG, a minister said.

Business Secretary Kwasi Kwarteng said the government could not put money into a "black box".

Mr Kwarteng told the BBC's Today programme that Liberty Steel was "an important national asset" but that the structure of its owner - Gupta Family Group (GFG) - was "very opaque" and "not helpful".

"We are custodians of taxpayer's money... and we feel that if we gave the (£170m) money, there was no guarantee that the money would stay in the UK, and would protect British jobs," he said.

• 'If the steelworks shuts it will destroy Rotherham'
• Liberty Steel: Government looking at 'all options'

Liberty Steel's founder, Sanjeev Gupta, is trying to refinance GFG after its key financial backer Greensill Capital filed for insolvency earlier this month.

Mr Kwarteng said he wanted to see Mr Gupta's plans "work through" before the government took any further action.

There are 5,000 staff employed at Liberty's 12 UK sites, which include Rotherham, Motherwell and Newport. Mr Gupta's empire employs 35,000 people worldwide.

Green plans

Mr Kwarteng said "all options are on the table" to keep Liberty Steel jobs and plants going, including nationalisation.

"We think that the steel industry has a future in the UK," he said.

The UK's industrial decarbonisation strategy means the government wants to see "clean steel" produced, he said.

"Electric arc furnace-produced steel of the kind that Liberty makes - we think that has a future in the UK," Mr Kwarteng said.

He said that while the future of the steel market is "uncertain", the government's "net zero" carbon plan "has changed the dynamics in terms of the government's relationship to parts of the economy."

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2021-03-30 09:54:52Z
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Liberty Steel nationalisation 'an option' says business secretary - BBC News

PA Media

The government has restated it is considering "all options" to keep Liberty Steel's UK plants and jobs afloat, including nationalisation.

On Sunday, the government rejected a request for £170m in financial support for the firm.

But that is due to concerns about the "very opaque" structure of its owner GFG, a minister said.

Business Secretary Kwasi Kwarteng said the government could not put money into a "black box".

Mr Kwarteng told the BBC's Today programme that Liberty Steel was "an important national asset" but that the structure of its owner - Gupta Family Group (GFG) - was "very opaque" and "not helpful".

"We are custodians of taxpayer's money... and we feel that if we gave the (£170m) money, there was no guarantee that the money would stay in the UK, and would protect British jobs," he said.

• 'If the steelworks shuts it will destroy Rotherham'
• Liberty Steel: Government looking at 'all options'

Liberty Steel's founder, Sanjeev Gupta, is trying to refinance GFG after its key financial backer Greensill Capital filed for insolvency earlier this month.

Mr Kwarteng said he wanted to see Mr Gupta's plans "work through" before the government took any further action.

There are 5,000 staff employed at Liberty's 12 UK sites, which include Rotherham, Motherwell and Newport. Mr Gupta's empire employs 35,000 people worldwide.

Mr Kwarteng said "all options are on the table" to keep Liberty Steel jobs and plants going, including nationalisation.

"We think that the steel industry has a future in the UK," he said.

The UK's industrial decarbonisation strategy means the government wants to see "clean steel" produced, he said.

"Electric arc furnace-produced steel of the kind that Liberty makes - we think that has a future in the UK," Mr Kwarteng said.

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2021-03-30 09:22:40Z
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Liberty Steel owner structure 'opaque', says Kwasi Kwarteng - BBC News

PA Media

The government has concerns about the "very opaque" structure of the owner of Liberty Steel, according to Business Secretary Kwasi Kwarteng.

On Sunday, the government rejected a request for £170m in financial support for the firm.

Mr Kwarteng said the government could not put money into a "black box" not knowing how it would be used.

But it is considering "all options" to keep Liberty Steel's UK plants and jobs afloat, including nationalisation.

Mr Kwarteng told the BBC's Today programme that Liberty Steel was "an important national asset" but that the structure of its owner - Gupta Family Group (GFG) - was "very opaque" and "not helpful".

"We are custodians of taxpayer's money... and we feel that if we gave the (£170m) money, there was no guarantee that the money would stay in the UK, and would protect British jobs," he said.

• 'If the steelworks shuts it will destroy Rotherham'
• Liberty Steel: Government looking at 'all options'

Liberty Steel's founder, Sanjeev Gupta, is trying to refinance GFG after its key financial backer Greensill Capital filed for insolvency earlier this month.

Mr Kwarteng said he wanted to see Mr Gupta's plans "work through" before the government took any further action.

There are 5,000 staff employed at Liberty's 12 UK sites, which include Rotherham, Motherwell and Newport. Mr Gupta's empire employs 35,000 people worldwide.

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2021-03-30 08:51:56Z
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Deliveroo sets listing price at bottom of initial range - Financial Times

Deliveroo has set the final price for its initial public offering at £3.90 a share, the bottom of its initial range and valuing the food delivery company at £1.3bn less than the top end of its original expectations.

While just over a week ago Deliveroo hoped its valuation could reach as high as £8.9bn, the final price per share leaves its market capitalisation at £7.6bn.

The London-based company blamed a further deterioration of stock market conditions on Monday for the decision, which comes as it prepares to close its order book around lunchtime on Tuesday.

The deal will still raise around £1bn in proceeds for the company and £500m for selling shareholders, including Amazon and co-founder Will Shu.

Deliveroo reiterated a statement on Monday, saying it had received “very significant demand from institutions across the globe”.

“Given volatile global market conditions for IPOs, Deliveroo is choosing to price responsibly within the initial range and at an entry point that maximises long-term value for our new institutional and retail investors,” it said.

After a year-long global stock market rally that gave US equity investors their best 12-month run in decades, conditions in the past couple of weeks have been more uncertain.

Markets on Monday were shaken by a fire sale of assets triggered by private investment company Archegos Capital Management, with shares in several large banks and high-performing media and tech stocks down.

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2021-03-30 07:07:27Z
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Archegos Capital fallout may wipe $6bn from global banks: Report - Al Jazeera English

Global banks may lose more than $6bn from the downfall of United States-based Archegos Capital, the Reuters news agency reported citing sources familiar with trades involving the US investment firm, as regulators and investors feared the episode would reverberate more widely.

Japan’s Nomura and Credit Suisse of Switzerland warned of big losses from lending to Archegos for equity derivatives trades, triggering a worldwide sell-off in banking stocks.

Morgan Stanley shares fell 2.6 percent and Goldman Sachs Group dropped 1.7 percent. Nomura shares closed down 16.3 percent, a record one-day drop, while Credit Suisse shares tumbled 14 percent, their biggest fall in a year. Deutsche Bank dropped 5 percent and UBS was off 3.8 percent.

Losses at Archegos Capital Management, run by former Tiger Asia manager Bill Hwang, sparked a fire sale of stocks including ViacomCBS and Discovery on Friday, a source familiar with the matter said on Monday.

“This is a challenging time for the family office of Archegos Capital Management, our partners and employees,” company spokesperson Karen Kessler said in a statement. “All plans are being discussed as Mr. Hwang and the team determine the best path forward.”

Speculative environment

Archegos was unable to meet banks’ calls for more collateral to secure equity swap trades they had partly financed. Swaps or so-called contracts-for-difference are transacted off exchanges, allowing managers like Hwang to amass exposure to publicly-traded companies without having to declare it. After those positions fell sharply in value, lenders sold big blocks of securities to recoup what they were owed, the sources said.

“This is the kind of thing that happens in a speculative environment. You start finding that things go wrong,” said Richard Bernstein, the chief executive of Richard Bernstein Advisors. “When you have people making certain bets based on what has outperformed in the past and the tide turns they get burned. The question is how much leverage they used.”

Nomura, Japan’s largest investment bank, warned of a possible $2bn loss, while Credit Suisse said a default on margin calls by a US-based fund could be “highly significant and material” to its first-quarter results.

Two sources said Credit Suisse’s losses were likely to be at least $1bn. One of them said the losses could reach $4bn, a figure also reported by the Financial Times newspaper. Credit Suisse declined to comment.

But several other banks appeared to be relatively unscathed. The financial effect on Goldman Sachs was immaterial, a separate source said. Likewise, Morgan Stanley, which sold $4bn in stocks related to Archegos on Friday, did not incur significant losses, US TV network CNBC reported.

Deutsche Bank said in a statement it had significantly lowered the risk of its exposure to Archegos without incurring any losses and was managing down its “immaterial remaining client positions,” on which it did not expect to incur a loss.

The broader market impact was muted with the US S&P 500 benchmark closing slightly lower, while financial stocks ended down more than 2 percent.

“You continue to see strength in the overall market. There is not fear of selling stocks altogether, there’s just fear in pockets of the market,” said Dennis Dick, the head of market structure at Bright Trading LLC in Las Vegas.

Regulators on watch

Investors questioned if the full effect of Archegos’ problem had been realised.

Market observers noted that only in February, hedge funds that had bet on a fall in the share price of struggling video game retailer GameStop took sizeable losses when it surged higher.

That forced hedge fund Melvin Capital Management to borrow money from another fund to stay afloat. Hedge fund deleveraging also contributed towards turmoil in the US Treasuries market in March 2020.

In the case of Archegos, the opaque and complex nature of its derivative trades, lightly regulated structure as a family office and high debt level – heightened by historically low-interest rates – prompted concern about potential systemic risk.

Regulators in the US, UK, Switzerland and Japan said they were closely monitoring developments.

Archegos bought derivatives known as total return swaps, which allow investors to bet on stock price moves without owning the underlying securities, according to one source familiar with the trades. The fund posts collateral against the securities rather than buying them outright with cash.

Archegos’ positions were highly leveraged. The firm had assets of about $10bn but held positions worth more than $50bn, according to the source who declined to be identified.

Thomas Hayes, the chairman of Great Hill Capital LLC in New York, said Hwang was known to run “a very concentrated, highly leveraged book”.

The underlying shares were held by Archegos’ prime brokers, which lent it money and structured and processed its trades. They included Goldman Sachs, Morgan Stanley, Deutsche Bank, Credit Suisse and Nomura.

Unwinding the positions led banks to sell large blocks of stock. Shares of ViacomCBS and Discovery each tumbled approximately 27 percent on Friday, while US-listed shares of China-based Baidu and Tencent Music plunged as much as 33.5 percent and 48.5 percent last week.

Other stocks caught up in Archegos-related liquidations included Baidu Inc, Tencent Music Entertainment Group, Vipshop Holdings Ltd, Farfetch Ltd, iQIYI Inc and GSX Techedu Inc.

Hwang, who ran Tiger Asia from 2001 to 2012, renamed the hedge fund Archegos Capital and converted it to a family office, according to a page capture of the fund’s website. Family offices act as private wealth managers and have lower disclosure requirements than other investment companies.

Hedge fund managers said they wondered why Hwang, whom several described as a “smart guy,” had made such big bets on ViacomCBS and Discovery, given the large wagers against the companies. The pair are not seen as high-growth companies, in contrast to other media stocks that have outperformed their peers during the COVID-19 pandemic, the sources said.

Hwang and his firm in 2012 paid $44m to settle Securities and Exchange Commission insider trading charges.

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2021-03-30 05:11:23Z
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