Workers arriving at Whyalla’s Steel City this morning are hopeful Sanjeev Gupta will stop the move to legally declare his business insolvent.
Workers arriving at Whyalla’s Steel City this morning are hopeful Sanjeev Gupta will stop the move to legally declare his business insolvent.

Workers react to Sanjeev Gupta insolvency hit

Outside the Whyalla steelworks this morning, staff showed mixed feelings about the news that scores of local jobs hang in the balance as creditors seek to seize control of Sanjeev Gupta's Whyalla steel operations.

Welding co-ordinator Tom Mitchell, who has been working directly or indirectly for the steelworks since 1978, said he was still confident about the future.

"The place was starting to move again," he said.

"(But) the world is going through something different with the COVID virus and everything has been affected.

"We'll have some discussions at work today and see what happens."

Mr Gupta's GFG Alliance has vowed to fight the move, lodged in the NSW Supreme Court today.

Citibank, acting on behalf of Credit Suisse, filed a winding up in insolvency application for OneSteel Manufacturing and Tahmoor Coal.

It could trigger the appointment of liquidators to the Whyalla steelworks and associated mines, which together employ more than 1800 South Australians, and to the Tahmoor colliery in NSW.

Technician Perry Eden, a contractor, said news about the winding-up application was "very worrying".

"I just want the whole Gupta experience to be successful," he said.

"I think we all really want him to succeed, otherwise Whyalla will be in a bad place.

"The COVID thing has put everything back.

"We're hoping that it will now get on the right track."

Storeman Brian Murphy was hoping "things work out".

"I've been in the company here since I was 16 and I'm now in my 40s."

He was hopeful Mr Gupta could navigate through his company's financial challenges.

"I think we just have to back him in," Mr Murphy said.

"We believe in him so let's hope he can do what he says."

 

Head of GFG Sanjeev Gupta. Picture: David Mariuz
Head of GFG Sanjeev Gupta. Picture: David Mariuz

 

LOCAL COMMUNITY LEADERS URGE CALM

 

Federal MP for Grey Rowan Ramsey said Industry, Science and Technology Minister Christian Porter would closely monitor the legal proceedings initiated in the NSW Federal Court yesterday by Citibank, acting on behalf of Credit Suisse.

"We are watching it very closely and are trying to seek clarification on Citibank's claim on behalf of Credit Suisse," said Mr Ramsay.

He warned a calm and steady approach was needed and that the steelworks was in a much better position than in the past.

"It's way too early to panic," he said.

"We've been through tough times before - so let's see what happens before we start jumping at shadows."

Whyalla Mayor Clare McLaughlin urged the community to remain positive as the process played out, and not to jump to conclusions.

"We've been reassured by GFG Alliance that they will vigorously defend any legal proceedings; that they continue to have sufficient funds for their current operations - which are performing very strongly - and that they are progressing well in securing alternative funding," Ms McLaughlin said.

"Council was recently briefed by GFG on their local operations, and it was extremely encouraging to hear about their profitability; the record rates of production; strong demand for their product; as well as the positive attitude of their employees despite recent external speculation.

"This is all very positive news that should give the community confidence in GFG's future in Whyalla."

Treasurer Rob Lucas added that the move was not entirely unexpected and "just an application in the NSW Supreme Court", the full extent of which would not be known until the May hearing.

"So, from the Government's viewpoint, we are saying at this stage people shouldn't jump to any alarmist conclusions.

"There are ongoing discussions. We had another discussion between State Government officers and Federal Government officers (Tuesday) at lunchtime."

Mr Lucas said that was a scheduled meeting "and at this stage we don't have any further details other than this application has been made".

"We hasten to say we don't want people to jump to alarmist conclusions at this stage because clearly there are significant numbers of workers and their families and others - and we don't want them to be unnecessarily alarmed," Mr Lucas said.

 

 

 

GFG VOW TO FIGHT THE MOVE IN THE COURTS

 

A spokesman for GFG said the company would fight the moves by Credit Suisse in the courts.

"Any proceedings instituted by Credit Suisse will be vigorously defended," he said. "We do not propose to comment on legal proceedings further.

"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."

The decision comes after parallel action by Citibank in the UK courts, and amid attempts by Mr Gupta to secure about $500m in new funding for his Whyalla steelworks to plug the funding gap left by the collapse of Greensill Capital.

The wind up application includes consent from McGrathNicol for it to act as liquidator over two companies.

McGrathNicol partner Keith Crawford said the insolvency firm would seek to keep the business running if it was appointed as liquidator, saying the liquidators would "work constructively" with stakeholders, including employees, customers, suppliers, creditors and government, as it reviewed the future of the business.

The court action comes as Mr Gupta struggles to contain the fallout of the collapse of his key financier, Greensill Capital, which dived into administration last month.

Despite racing to refinance about $US5bn ($6.56bn) owed to Greensill, Mr Gupta has remained defiant, saying the debt isn't due for another three years and none of his steel plants would close under his watch. The NSW Supreme Court action comes five days after Credit Suisse sought a winding-up order of his $US6bn metals business, Liberty Commodities.

 

SANJEEV: WHYALLA'S SAVIOUR?

 

Mr Gupta acquired Whyalla steelworks and other assets from Arrium in 2017 after it fell into administration.

The steel works at Whyalla. Picture Simon Cross
The steel works at Whyalla. Picture Simon Cross

He was hailed a saviour of the town. At his "Big Reveal" in December 2018, plans were unveiled to pump $600m into upgrading the steelworks, bolstering its capacity and securing 2500 jobs, while feasibility studies for a massive new steelworks producing up to 10 million tonnes per annum were worked through.

Plans to build a 280MW solar farm had already been announced, along with possible hydropower ambitions.

A collapse now would be devastating for the region.

 

 

Originally published as In Whyalla: Workers react to Steel City insolvency hit


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