Italy guaranteed 86 mln euro Greensill loan to Gupta steel arm, filing says

LONDON, March 19 (Reuters) – The Italian government guaranteed an 86 million euros ($102 million) loan from Greensill Bank, part of the collapsed Greensill Capital group, to one of steel magnate Sanjeev Gupta’s firms, according to accounts filed with the Italian corporate registry in recent weeks.

The firm, Liberty Magona SRL, secured a guarantee from SACE SpA, Italy’s state-controlled export credit agency, for the loan under measures to help companies navigate the coronavirus crisis, according to Liberty Magona’s accounts for a period from Jan. 1, 2019 to June 30, 2020 which include information on material post-yearend events.

Piombino-based Liberty Magona, which makes galvanized steel, said the three-year loan was taken out in late August last year to strengthen its finances at a time when it was facing weaker demand for its products due to the pandemic.

The Italian Ministry of Economy and Finance did not immediately respond to a request for comment. GFG Alliance and Greensill declined to comment on the loan.

The German financial regulator has filed a criminal complaint against Bremen-based Greensill Bank.

Greensill Capital group filed for bankruptcy protection in Britain and Australia this month, citing a $5 billion exposure to Indian-British businessman Gupta’s GFG Alliance. It said Gupta’s firms had begun to default on its obligations.

GFG, an umbrella company for Gupta’s network of steel, aluminium and energy companies, said last week it was looking to secure additional working capital facilities to help it weather challenging market conditions but was also operationally strong and benefiting from buoyant steel markets.

GFG Alliance employs 35,000 people across 30 countries, according to its website. In Britain, the opposition Labour Party has said the government should consider nationalising the company if it cannot secure the financial backing it is trying to attract.

Italy is not the only country to have provided guarantees to Gupta’s firms. The Scottish government gave a 575 million pound guarantee to the group in 2016, Reuters reported in 2019, citing people familiar with the matter.

UK media have reported that the London government has also guaranteed hundreds of millions of loans to GFG Alliance or connected companies under Coronavirus loan schemes.