Gupta faces struggle to fund bid for insolvent UK steel arm

Sanjeev Gupta, the metals tycoon who saw his main UK business forced into insolvency this week, is facing a struggle to secure the funding required for a competitive bid to regain control of it.

Sky News understands that an asset-based loan from BlackRock, the world's biggest asset manager, would be expensive for Mr Gupta, with one source suggesting a similar arrangement struck in his other international operations came at an interest rate of approximately 15%. Mr Gupta also claimed in a witness statement presented in court this week that Fidera, a London-based investment firm, was in "advanced" discussions to back his offer to re-acquire SSUK through a pre-pack administration.

Executives at Mr Gupta's Liberty Steel group said on Thursday after the Official Receiver took control of Speciality Steel UK - which employs nearly 1,500 people at steel plants in South Yorkshire - that he would seek to buy it back. "[Gupta Family Group] will now continue to advance its bid for the business in collaboration with prospective debt and equity partners and will present its plan to the official receiver," Jeffrey Kabel, chief transformation officer, at Liberty Steel, said.

"GFG continues to believe it has the ideas, management expertise and commitment to lead SSUK into the future and attract major investment." While BlackRock is understood to remain willing to participate in a deal, the prospect of Fidera's involvement appears to be remote. The firm would not comment on Friday, but sources close to it said it had had only one meeting with Mr Gupta and that it had been about debt, rather than equity, funding.

That leaves Mr Gupta needing to find tens of millions of pounds to fund a bid within weeks, with the special manager acting on behalf of the Official Receiver expected to launch a formal sale process for SSUK as early as next week, according to Whitehall sources. The tycoon's allies labelled the decision to force SSUK into compulsory liquidation as "irrational".

"The plan that GFG presented to the court would have secured new investment in the UK steel industry, protecting jobs and establishing a sustainable operational platform under a new governance structure with independent oversight," Mr Kabel added. "Instead, liquidation will now impose prolonged uncertainty and significant costs on UK taxpayers for settlements and related expenses, despite the availability of a commercial solution." Earlier this week, Sky News revealed that Mr Gupta was plotting to hand control of SSUK to his family in a bid to avert a government-orchestrated fire-sale.

One source close to the situation claimed that the ownership structure devised by Mr Gupta would be independent, ring-fenced from him and have "robust standards of governance" - although that suggestion was always likely to be viewed with extreme suspicion by observers of his once-sprawling global operations. Behind Tata Steel and British Steel, SSUK is the third-largest steel producer in the country.

Other parts of Mr Gupta's empire have been showing signs of financial stress for years. Mr Gupta is said to have explored whether he could persuade the government to step in and support SSUK using the legislation enacted to take control of British Steel's operations.

Whitehall insiders told Sky News in May that Mr Gupta's overtures had been rebuffed. He had previously sought government aid during the pandemic but that plea was also rejected by ministers.

SSUK, which also operates from a site in Bolton, Lancashire, makes highly engineered steel products for use in sectors such as aerospace, automotive and oil and gas. Spokespeople for GFG and BlackRock declined to comment..