Greensill Capital applied for management, warning that he is in a “serious financial crisis”, unable to pay a $ 140 million loan to Credit Suisse and facing “defaults” from his main client GFG Alliance.
Greensill’s lawyers appeared before a UK court on Monday in a lawsuit that potentially paves the way for American private equity group Apollo Global Management to buy distressed parts of the business.
The order marks the last stage of the collapse of a company supported by SoftBank that had sought a $ 7 billion valuation last year, with a deal that spanned the UK and Australia.
Greensill specializes in supply chain finance, where companies borrow money to pay their suppliers. It went into crisis last week after its main insurer refused to renew a $ 4.6 billion contract and Credit Suisse froze $ 10 billion in funds linked to the company, depriving it of an important source of financing.
Greensill’s lawyers said on Monday that the loss of this insurance contract “caused a real crisis”. They added that Greensill had about $ 5 billion in exposure to tycoon Sanjeev Gupta’s GFG Alliance group of companies, which “is currently experiencing financial difficulties” and “has started to default” on its Greensill bonds.
According to court documents, the GFG said in a letter on February 7 that if Greensill stopped providing working capital, it would go bankrupt.
GFG declined to comment.
Greensill’s lawyers said in court that Credit Suisse, citing “default events”, demanded the repayment of a $ 140 million loan it granted to Greensill in October. The lawyers said Greensill had “no conceivable way” to repay him.
The hearing provided the most detailed account of Apollo’s attempts to acquire viable parts of Greensill Capital. This deal is unlikely to result in returns for Greensill Capital shareholders, such as SoftBank’s Vision Fund, which poured $ 1.5 billion into the company in 2019.
Apollo made a $ 59.5 million cash offer for Greensill’s intellectual property and IT systems that would involve taking over “the majority” of its British company Greensill Capital Management Company, according to court documents. The US group is “the only reliable bidder,” the documents say.
Apollo’s lawyer told the court that negotiations were still underway and that “there were still some issues to be resolved” before a deal could be finalized.
Under an agreement, Apollo would not accept any financing for GFG, the industrialist dubbed the “steel savior” in the UK, who used Greensill as its main creditor, people familiar with the matter said.
Apollo said on Monday it would merge with Athene, the life insurer it created at the height of the financial crisis. Two people familiar with the matter said it would not prevent the Greensill deal.
Additional reporting by Sylvia Pfeifer