South Australia’s Whyalla Steelworks could receive government assistance as legal action against its billionaire owner threatens thousands of jobs.
Citibank, acting on behalf of Credit Suisse, is taking Sanjeev Gupta to court in an attempt to wind up two of his operations – OneSteel Manufacturing and Tahmoor Coal.
If successful, the move could trigger the appointment of liquidators to the Whyalla steelworks and its associated mines, which employ more than 1800 South Australians, and to the Tahmoor coal mine in NSW.
It is the latest setback for Mr Gupta’s global business after the collapse of major lender Greensill last month.
Credit Suisse is trying to recoup some of the money it is owed by breaking up Mr Gupta’s Australian assets.
But his UK-based company, GFG Alliance, has vowed to vigorously defend the court action, saying it does not conduct any financing with Credit Suisse.
The Advertiser newspaper reports Premier Steven Marshall and Prime Minister Scott Morrison have discussed providing bridging finance to keep the steelworks afloat should creditors take control of GFG.
Mr Marshall said there had been no requests for financial assistance from the company.
“It hasn’t been asked for and I don’t think it will be required,” he said on Wednesday.
“We’re not ruling anything out but I make the point – I think the Australian operations are the least of the problems for the GFG group.”
The premier said he didn’t want to see parts of the business sold off and expressed hope Mr Gupta could secure refinancing.
“Obviously we’re going to do every single thing we can to protect those jobs here in Australia and more particularly from my perspective, those jobs up at Whyalla,” he said.
“The workforce there has done a mighty job over the last five years to transform the productivity of that plant.”
Federal Opposition Leader Anthony Albanese said saving the steelworks was in the national interest.
“The knock-on effects if Whyalla Steelworks were to not be able to continue to produce would be devastating for our national economy,” he said.
Greens senator Sarah Hanson-Young called on the Prime Minister to purchase equity in or buy out the steelworks and OneSteel if necessary.
The steelworks were bailed out by the big four banks in 2016 when former operator Arrium entered voluntary administration but have since turned things around.
“The Australian businesses are performing well and generating positive cash flow, supported by the operational improvements we’ve made and strong steel and iron ore markets,” GFG Alliance said.
South Australian Treasurer Rob Lucas said Whyalla Steelworks employees should not be too concerned.
“People shouldn’t jump to any alarmist conclusions at this stage,” he said.
“(GFG Alliance) are confident they are going to be able to manage a renegotiation of their financing arrangements. That is what they have said publicly and that is what they have been telling us privately.”
The case is set for a directions hearing on May 6.