Britain’s third-biggest steel producer has asked ministers to approve an emergency bailout of as much as £170m as it teeters on the brink of collapse.
Sky News has learnt that GFG Alliance, the conglomerate headed by Sanjeev Gupta, wrote to the government late this week to request the emergency funding with thousands of jobs hanging in the balance.
The letter from Mr Gupta follows weeks of speculation about the future of GFG, which owns Liberty Steel, the employer of 3,000 people across Britain.
GFG employs a further 2,000 in the UK across other divisions of his empire, which includes Alvance, a global aluminium business, and Simec, a renewable energy operation.
Its reliance on financing from Greensill, the supply chain finance provider which collapsed earlier this month, has left it in a parlous state.
A source close to the company acknowledged that its approach to the government represented "a last roll of the dice".
The letter to officials at the Department for Business, Energy and Industrial Strategy is understood to have said that GFG required new funding of up to £170m to cover working capital and operating losses, although any negotiation could focus on a higher or lower figure, the source added.
There were growing concerns on Friday that GFG could collapse into administration in the coming days without emergency taxpayer funding.
Kwasi Kwarteng, the business secretary, has met Liberty executives several times in recent weeks to discuss the crisis at the group.
He told MPs on Thursday that the government was aiming to stitch together a package of support for Liberty Steel, although it is unlikely that this would be delivered ahead of any insolvency.
The government is said to have concerns about the governance and opaque structure of Mr Gupta’s empire.
Officials are also understood to have expressed doubts about whether any taxpayer funding would remain in the UK, although it was unclear whether a formal response to Mr Gupta had been made yet.
"The company has a range of assets spread across England and Wales in particular, and [government is] looking at what specific assets…are necessary, and we hope to support the company in its entirety," he said.
The tycoon told employees earlier this month that Greensill’s demise had created a "challenging situation", but efforts to refinance its borrowings have so far not produced a workable deal.
GFG has hired Alvarez & Marsal and PJT Partners to advise it on efforts to identify new sources of funding.
Industry sources said that the government was also lining up City advisers to oversee what could be a complex and protracted break-up of Mr Gupta’s group.
A GFG Alliance spokesman declined to comment on its request for government support, but said the company "as a whole is operationally strong".
"While Greensill’s difficulties have created a challenging situation, we have adequate funding for our current needs.
"Discussions to secure alternative long-term funding continue to make good progress and while this takes place we have asked all of our businesses to manage cash carefully.
"We are grateful for customers and suppliers support in this work which comes alongside our aim to secure additional working capital facilities to support the business and our use of the furlough scheme to support employees.
"We will continue to work closely with the unions and our employees to identify the most effective ways of supporting the business and preserving jobs."
Greensill’s collapse put the brakes on GFG’s supply of working capital, and appears to have left it with few alternatives beyond the request to Whitehall.
Sky News revealed earlier this month that the British Business Bank, which administers the Treasury’s emergency pandemic loan schemes, was preparing to withdraw the government guarantee on loans from Greensill to Mr Gupta’s companies amid concerns about breaches of their rules.
The collapse of Mr Gupta’s group would be sensitive for Boris Johnson’s administration, with the businessman’s plants located in politically important areas such as Hartlepool, Newport and Rotherham.
Liberty Steel, which employs 30,000 people globally, is a key supplier to industries such as aerospace through its speciality steel operation.
Its Liberty Engineering arm is an important component of the supply chains of automotive groups such as Jaguar Land Rover.
The approach to ministers makes GFG the fourth UK steel producer to request state support in recent years.
British Steel collapsed into compulsory liquidation in 2019, before being bought by Jingye of China.
Tata Steel, the UK’s biggest steel manufacturer, has been holding talks with officials for almost a year about a package of taxpayer support, although no deal has been agreed.
The only company to have benefited from taxpayer support under the Project Birch initiative to support businesses hit by the pandemic is Celsa, a Welsh-based steelmaker.
A Government spokesperson said: "The government is closely monitoring developments around Liberty Steel and continues to engage closely with the company, the broader UK steel industry and trade unions.
"The government has supported the steel sector extensively, including providing over £500m in recent years to help with the costs of energy.
"Our unprecedented package of COVID support is still available to the sector to protect jobs and ensure that producers have the right support during this challenging time."