Major Greensill clients included the coal company of West Virginia Governor Jim Justice
Greensill Capital has relied on a handful of clients for much of its income, including a coal miner owned by the governor of West Virginia, according to people familiar with Greensill’s operations and documents reviewed by Wall Street Newspaper.
Bluestone Resources Inc., the mining company owned by West Virginia Governor Jim Justice, has borrowed about $ 850 million from Greensill, making it one of Greensill’s biggest clients, people familiar with the operations said. by Greensill.
Representatives for Bluestone and the West Virginia governor’s office did not immediately respond to requests for comment.
Greensill has long said he works with millions of clients, according to his website, many of whom are small business suppliers, and has partnerships with dozens of banks, insurers and corporations.
But a handful of relationships had become crucial for Greensill in recent years. For most of 2019, more than 90% of Greensill’s revenue came from five clients, according to an internal Greensill report reviewed by the Journal. In 2020, it was around 70%, according to the report.
Other big customers included British steel magnate Sanjeev Gupta and British wireless giant Vodafone Group PLC, according to some people.
Greensill was founded in 2011 by former Morgan Stanley and Citigroup Inc. banker Lex Greensill. He found himself embroiled in a seizure last week when Credit Suisse Group AG frozen $ 10 billion in investment funds that Greensill relied on to fuel his business.
Greensill plans to insolvency case in the coming days in the UK and is in talks to sell its operating business to Global management of Apollo Inc. reported the Journal, citing people familiar with the matter. The sale would only represent a fraction of its peak valuation of $ 4 billion in 2019.
Greensill’s loans were mostly short-term, and some clients without access to cash will need to find other sources of funding in the weeks and months to come. Apollo, through an insurance affiliate, is likely to fill the void for some, but not all, of Greensill’s customers, the Journal reported.
Greensill has specialized in an area known as supply chain finance, a form of cash advance that allows businesses to extend the time it takes to pay bills. Greensill conditioned these cash advances in bonds. Credit Suisse funds were a major buyer of these securities, giving Greensill the firepower it needs to grow its business.
Credit Suisse sold the funds to insurers and other professional investors, classifying them as relatively low risk, according to fund documents sent to investors.
In addition to Bluestone, Greensill’s other U.S. clients included several blue chip companies and state government agencies, according to documents Credit Suisse sent to investors. More than half of Credit Suisse fund assets were tied to clients in the United States in January, according to the documents.
Credit Suisse announced on Friday that it would liquidate the funds. Bluestone was among the Credit Suisse fund companies, according to documents sent to investors.
Mr. judge is the billionaire governor of West Virginia who went from Democrat to Republican in 2017. He owns several coal-related businesses in the region and has settled a number of cases in recent years for alleged non-payment of bills, according to court records released by the journalism site ProPublica investigation.
Supply chain finance is almost always reimbursed in cash. But for a loan in 2018, the coal miner repaid Greensill in a combination of cash and stock warrants. More than half of Greensill’s earnings for 2018 were tied to $ 25 million in warrants that gave Greensill the right to own shares in the mining company, the Journal reported earlier.
Last summerBluestone’s general counsel told the Journal the company has been working with Greensill since 2018 to improve its working capital situation. The portion of the fees that she paid Greensill that year in share purchase warrants “were very quickly repaid in full in cash,” he said, without further clarification.
Another crucial relationship from Greensill was with Mr. Gupta and its GFG Alliance group of companies, according to people familiar with the matter. German banking regulators have banned the activity of a Greensill-owned bank after an audit failed to provide proof of receivables purchased from GFG Alliance, which owns steel mills and other industrial assets in a dozen countries.
A spokesperson for GFG said its operations are proceeding smoothly and that it is making progress in its discussions to secure funding from other financial institutions.
Vodafone is a long-time customer of Greensill. A supply chain finance fund that Greensill set up with GAM Holdings AG was referred to within the two companies as “Vodafund” because Vodafone was both an investor in the fund and received one. funding, according to people familiar with the relationship and an email reviewed by the Journal.
Vodafone is no longer an investor in the fund, according to the spokesperson for the company.