Sanjeev Gupta’s GFG Alliance is in negotiations with Grant Thornton, the administrators of collapsed Greensill Capital, over a “standstill agreement” between the two parties.
It comes after court filings submitted earlier this week revealed that GFG, Greensill’s biggest client, had begun to default on repayments to the boutique bank.
It has been reported that Gupta could owe up to £3bn to the lender.
An internal message to staff from Gupta seen by City A.M. said that there were “constructive discussions” between the two sides.
A formal deal “would put on hold arrangements between the two parties and allow both sides more time to assess and negotiate next steps,” the message said.
GFG has brought on board PJT Partners, Alvarez & Marsal and Norton Rose Fulbright to help with the negotiations, Gupta said.
Since Greensill filed for insolvency on Monday there have been widespread concerns that it could lead to thousands of jobs being lost at Gupta’s conglomerate, which owns steel and aluminium works around the world.
In total, it employs about 35,000 staff, 3,000 of which work at its 11 UK steel sites.
In meetings with trade unions earlier this week, Gupta insisted that the firm had “adequate funding” to get through the initial period.
But he said that GFG was seeking to secure alternative means of financing.
In today’s message, he added: “On refinancing, we are enthused by the amount of offers that we have received that reflects the strength of our business.
“However, given the scale of our operations this process will take some time to organise.”
In the meantime, however, he added: “While we bridge to new long term funding arrangements post Greensill there will be less group support available.
“We are therefore implementing careful plans to make these businesses more financially sustainable by working with management, unions, customers, and suppliers to boost cash flow.”
Grant Thornton and GFG Alliance declined to comment.