Sanjeev Gupta: Looking back and looking forward
Over the past five years we have made incredible progress towards ...
In this edition Sanjeev gives an update on the activities across the GFG Alliance.
He talks about the four new subject expert directors that recently joined the LIBERTY business who make up the Restructuring and Transformation Committee. We also hear from Jeff Stein, Chairman of the committee who gives us an update on progress so far.
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Show Transcript:
| TIMECODE | SPEAKER | DIALOGUE |
| 00:04 | CHLOE | Hello and welcome to âSpokenâ â the podcast for GFG Alliance colleagues across the world. Iâm Chloe Tilley, and this time we continue to look at the refinancing and restructuring of the business. Later, weâll meet one of GFGâs new senior appointments â Jeff Stein. But first, joining us as always, is Sanjeev Gupta, Executive Chairman of the GFG Alliance. HI Sanjeev, how are you? |
| 00:24 | SANJEEV | Hi Chloe, not bad. Holding up. |
| 00:28 | CHLOE | Well, that’s good to hear. Sanjeev, letâs start by getting an update from you about the business since we last spoke. First, whatâs the latest news you have on the refinancing process? |
| 00:37 | SANJEEV | We’ve made some very solid progress, the most advanced we spoke about before which is Australia, which is now in touching distance. There are various other work streams across the world, in the UK, in Europe, in other places, which are all progressing at their own speed. So yeah, we’re very much on the journey. |
| 00:57 | CHLOE | Okay, weâll talk about the UK in a moment. But in terms of developments elsewhere, how are other parts of the GFG business doing? |
| 01:03 | SANJEEV | Businesses, fundamentally, are enjoying record performance. Literally all-time highs in many of our commodities and sectors. As an example, Galati just published its Q1 results and they were the best ever, since 2008, and we’re expecting them to get better. So, we have a huge amount of tailwind at the moment in our markets, which we’re grateful for. |
| 01:27 | CHLOE | Now, the UKâs Governmentâs Business, Energy and Industrial Strategy Committeeâs inquiry into the UK steel industryâs future, is continuing. This includes LIBERTY Steelâs response since the failure of Greensill Capital. Why are you not personally taking part in the committeeâs sessions? |
| 01:43 | SANJEEV | Chloe, it was my absolute intention and I was keen to basically participate because I have a lot to say about the UK steel industry, it’s my passion for quite a long time as you know, and I care about it deeply. but based on the interviews which have been held so far, unfortunately, the very strong legal view which was formed, which I also considered and came to the view, it would be impossible for me to give an interview which would satisfy what the committee is after So what we have decided to do instead is do detailed evidence on all of the questions, all the topics of the committee’s interest, which we have a lot to say about, and we’ve also offered that any questions they have, we’ll try our best to reply to them in writing. |
| 02:27 | CHLOE | Youâve been a strong advocate of the revival of the UK Steel industry. Whatâs your view now of the future of UK steel? |
| 02:32 | SANJEEV | We have a strong view and belief there is a future for the UK steel industry. That view is centred around what we call ‘Green steel’. And the concept is basically, for the UK, very much about recycling the steel which we’ve already produced and accumulated in our system. So there’s more and more used steel now appearing as scrap to be recycled, most of which the country exports. Our model is, very simply, to keep that scrap at home, remelt it at home and basically substitute imports which are coming from abroad at the moment, hence keeping skills and jobs at home. So that’s been our model from the beginning, there’s nothing new, but it’s really now coming together. I think there is now a real wave of recognition of the economic viability of green steel, given the fact that the UK exports scrap and imports steel. So what we need now to enable this to go further, is two or three things in in terms of policy in my view. One of the big constraints in the UK for steel and recycling is the price of energy. UK prices of energy and electricity are multiple, three or four times, of some of our partners or competitors in Europe, so that needs to be addressed one way or another. It can be addressed in several ways, we for example have taken that into our hands and we have many renewable energy projects across the country. So more support for renewable energy, let’s say, to try and bring down the price of energy one way or another is a critical requirement. Second, I think, in terms of – especially now with the UK coming out of Europe with Brexit and having the ability to form its own carbon policy, I think that’s a once in a lifetime opportunity. A carbon policy which encourages rather than discourages new investment in decarbonised technologies is the answer. I could go into detail on that, I will when I provide my evidence to the committee. That’s, I think, absolutely key. Instead of promoting or supporting the continuance of highly carbon-emitting industries, what needs to happen is new industries that can be decarbonised need to be encouraged and in some way or another we need a carbon price to pay at all, and there are different ways in which that can be done. And of course, the last but not least important issue as always is having fair trade. So we need to be consciously careful. I mean, I’m a big promoter of not having subsidies and not having undue tariffs, but nonetheless, there needs to be a level playing field. So, in terms of trade policy, we need to constantly monitor and watch that, and I’m pleased to see some of the recent developments. |
| 04:52 | CHLOE | Ok. Now, Sanjeev, in a moment weâll be meeting Jeff Stein, who heads up LIBERTYâs new Restructuring and Transformation Committee. Remind us, why did you feel the need to set up this committeeâŠ. |
| 05:02 | SANJEEV | First was, we got hit by the tsunami of the collapse of our biggest lender, and we weren’t prepared for it which is something I regret. But we had to handle it. And in terms of my own bandwidth, it’s, you know I’ve got 24 hours in a day. I have a great team supporting me all over the world, but nonetheless, when a big event like this happens my bandwidth ends up getting stretched, and I have to basically work as many hours as I can, addressing immediate issues in all our different countries and all our different stakeholders. In the early days it was very, very gruelling, it continues to be hard work, but in the early days, it was very gruelling because all governments, unions, local stakeholders, customers, suppliers, everybody wanted to talk to me to understand what was going on, were we going to survive, what’s going on – you know, what’s the consequence of all this? So I really needed, let’s call it an A team, to support me with this process because we obviously had to now restructure and refinance our businesses with new lending, new financial participants since Greensill was gone who we had relied on for a long time. And we needed to really look at our businesses, one by one, in each country, critically and say okay, look, given that we have had this shock to the system, which businesses are core, which businesses do we need to support, which businesses perhaps are underperforming or would do better in somebody else’s portfolio? So hence, I set up this committee, to really guide me, help me. And the idea was to have some independent experts who were not all-time directors or all-time employees of the company, but they had independent expertise and an independent eye so they could basically give an unbiased input and provide the expertise in this process. |
| 06:42 | CHLOE | OK well thanks for now Sanjeev, and weâll be back with you, later in the podcast. |
| 06:48 | music | |
| 06:48 | CHLOE | So, joining us now from Dubai is LIBERTY Steel Groupâs new Chief Restructuring Officer – Jeff Stein. Hello Jeff… |
| 06:56 | JEFF | Hello Chloe, good to speak to you today. |
| 06;57 | CHLOE | And you too. Now, before we talk about business, letâs get to know you briefly. Tell us a bit about what you like to do away from work⊠|
| 07:04 | JEFF | First of all, Chloe, I really enjoy spending as much time as I can with my family. I am married, I have a wife and two children, I have an eighteen-year older daughter who just graduated from high school and will be attending university this fall, and I have a sixteen-year-old son who’s a rising sophomore in high school. We also, as a family, have two dogs. They provide us with much joy and love. And when I’m not with my family I would say my primary hobby, which is something that provides both mental and physical benefits to me, is exercise. I very much enjoy running, cycling and weight training. |
| 07:50 | CHLOE | Sounds great. Now, give us a spin through your pre GFG career⊠|
| 07:51 | JEFF | Prior to my appointment to the board of the Liberty Steel Group, I have been active and engaged in what I would describe as the distressed and special situations investment vertical throughout my entire career, of approximately thirty years. Now, I am able to focus exclusively with companies, supporting their efforts directly, from the inside in relation to ascertaining the best path forward to maximise value, to minimise the risk and execution of doing so, to ensure that we do everything in our power to protect the company, to protect the board, to protect the management team, to protect the employees, to protect all of our external constituents. So, our customers, our suppliers, our regulators, and so forth. |
| 08:41 | CHLOE | Jeff, Sanjeev just explained a few minutes ago why the Restructuring and Transformation Committee was set up. Can you tell us how it operates and who is on it? |
| 08:50 | JEFF | Yes. The restructuring and transformation committee consists of four members. I serve as the chairman of the committee. In addition, Jeff Gable, who is the Chief Transformation Officer of the company and Deepak Sogani who is our newly appointed Chief Financial Officer, and Ian Hunter who is our recently appointed Chief Governance Officer. The committee is active and engaged first at the board level and engaging with the board of our parent company, as well as the boards of numerous subsidiaries, in order to lead the global restructuring effort. |
| 09:30 | CHLOE | Now, the committee has been established since the 5th of May, so it’s not long, but what have you achieved since then? |
| 09:37 | JEFF | We have been, in my opinion, exceptionally effective at stabilising the current situation, and did it through direct dialogue. We need, given the rapidity with which the situation is evolving, creating a framework for faith and trust. And I think we were able to do that very effectively, first with Credit Suisse asset management, and as a result of that, we have agreed to several of what we refer to as standstill arrangements that allow for time and space. We have been very focused on the refinancing of our primary exposures in Australia. We have been very successful in developing revised business plans for our UK operations. That process is ongoing, we’re working collaboratively with our creditors. Separate, apart from that, we have effectuated the same type of engagement with the Greensill bank and its key constituents. |
| 10:44 | CHLOE | And whatâs going to be your prime concern in terms of the restructuring over the coming months? |
| 10:51 | JEFF | The prime concern, as is the case I think with all restructurings, is the inability for the company to effectuate control over all of its counterparts. And so, as a result of that, we need to be extremely proactive in communicating with people both internally and externally. And we need to do everything in our power to ensure that they understand that our underlying operations are performing exceptionally well and that we expect to continue to keep paying our suppliers, that we expect to continue to keep serving our customers, that this restructuring is about our global financing and the impact of the Greensill bank failure is something that we have to address to successfully achieve our goals and objectives. |
| 11:46 | CHLOE | Now finally, youâve joined GFG at a challenging time, how are you finding the experience? |
| 11:51 | JEFF | For me, it really has been an extraordinary experience. The people here are extraordinary. This is unlike any other organisation that I’ve ever been a party to, most of which have been highly regulated, public companies, or rigorously managed private equity companies. This is something very different. It’s a family, and I would say that is the best description, and it is a character quality about this company that I think is distinct, unique and separates it from any other company that I’ve worked with before. And I think if we can keep the family together, not only generate the optimal outcome, but I think the future, in terms of Liberty 2.0 will be brighter than ever. |
| 12:30 | CHLOE | Jeff, thank you so much for joining us⊠|
| 12:31 | JEFF | My pleasure Chloe, thank you. |
| 12:33 | CHLOE | Next, weâre going to be back with Sanjeev, including news on the Chairmanâs Global Excellence Awards 2021. |
| 12:49 | MUSIC | |
| 12:43 | CHLOE | So, Sanjeev, The Chairmanâs Global Excellence Awards are a great way to recognise colleaguesâ contributions to the business. Tell us a bit about your thinking behind launching this event⊠|
| 12:53 | SANJEEV | So the event in itself basically was born – well, not born, let’s say, transformed, while I was living in Australia. They had safety awards and other awards and so on. When we defined our values of family, change, sustainability, we thought that it was a good idea to attach a process whereby people can compete and be directly recognised for the efforts that they’re making in adopting, integrating, instilling those values into our business. And hence the Chairman’s Awards were born. And this year is special because it’s obviously the first time that we’ll be doing it virtually given the challenges that COVID posed. But I’m really very encouraged by the response, we’ve had 220 submissions across fourteen countries, and we’ve narrowed it down to 24 finalists, and the process will continue and close soon. |
| 13:43 | CHLOE | Ok, well, we look forward to the awards later this year. Finally, whatâs your message to colleagues about your priorities for the business over the next few weeks? |
| 12:52 | SANJEEV | Look, first of all, I want to thank everybody and congratulate people for their dedication and hard work which has meant really, I would say, we’ve been able to stabilise the situation. We’ve been able to now have a cooperative dialogue discussion progress, significant progress in some cases, with our creditors. We’ve had significant progress that has been made in terms of refinancing various businesses one by one. And we’ve now been able to start to reorganise some of our businesses to be better, to be sharper, to basically take full advantage of the tailwinds which are supporting our businesses. Also, to look at businesses more critically in terms of their performance. Previously, especially their financial performance, the cash flow utilisation, things like this. A lot of things which a fast-growing company ignores sometimes because we’re running so fast we can leave behind some of these real pressure points or real critical analysis and holding everybody’s feet to the fire to do the best they can. And I think there’s a lot more of that happening now, so I’m very sure that at the end of this journey we will have a much leaner, a much more efficient, much more driven, much more bottom line-driven business, rather than just a top line. So I’m very happy with that, so my message is to keep up the hard work. I know it’s not easy still, despite the fact that it is getting better, but nonetheless, there are still constant challenges to face. So we’re on the right journey, and we’ll end in the right place is my message, and I want to thank everybody again for their continued hard work despite these unparalleled and totally unexpected challenges we’ve been facing. |
| 15:29 | CHLOE | Well Sanjeev, as always, thanks for joining us and look forward to speaking with you on our next edition of the podcast. |
| 15:34 | SANJEEV | Thank you very much, Chloe. |
| 15:35 | CHLOE | Do join us next time when weâll keep you updated with the latest news, including the refinancing of GFG. Until then, from me Chloe Tilley and Sanjeev Gupta, itâs goodbye. |
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