Greensill’s key clients included West Virginia Governor Jim Justice’s coal company

Greensill Capital relied on a handful of clients for a large chunk of its revenue, including a coal miner owned by the West Virginia governor, according to people familiar with Greensill’s operations and documents reviewed by The Wall Street Journal.

Bluestone Resources Inc., the coal mining company owned by West Virginia Governor Jim Justice, borrowed about $ 850 million from Greensill, making it one of Greensill’s largest 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 that it works with millions of clients, according to its website, many of them small providers of corporate clients, and has partnerships with dozens of banks, insurers and businesses.

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 clients included British steel magnate Sanjeev Gupta and British wireless giant Vodafone Group PLC, according to some of the people.

Greensill was founded in 2011 by former Morgan Stanley and Citigroup Inc. banker Lex Greensill. It was embroiled in a crisis last week when Credit Suisse Group AG

He froze $ 10 billion in mutual funds that Greensill relied on to power his business.

Greensill plans to file for insolvency in the coming days in the UK and is in talks to sell its operating business to Apollo Global Management. Inc.

The Journal has reported, citing people familiar with the matter. The sale would be for a fraction of its maximum valuation of $ 4 billion in 2019.

Greensill’s loans were mostly short-term, and some cashless customers will need to find alternative sources of financing in the coming weeks and months. Apollo, through an insurance affiliate, is likely to fill the gap for some, but not all, Greensill clients, the Journal reported.

Greensill specialized in an area known as supply chain financing, a form of cash advance that allows companies to extend the time to pay bills. Greensill packaged those cash advances in bond-like securities. Credit Suisse funds were one of the main buyers of those securities, giving Greensill the firepower to expand his 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 clients in the US included several blue-chip companies and state government agencies, according to documents Credit Suisse sent to investors. More than half of the assets in Credit Suisse’s funds were tied to clients in the United States in January, according to the documents.

On Friday, Credit Suisse said it would liquidate the funds. Bluestone was among the companies in Credit Suisse’s funds, according to documents sent to investors.

Justice is the billionaire governor of West Virginia who switched from Democratic to Republican in 2017. He owns several coal-related businesses in the region and has settled several cases in recent years for alleged non-payment of bills, according to the court. records published by the investigative journalism website ProPublica.

Supply chain financing is almost always repaid in cash. But for a loan in 2018, the coal miner paid Greensill in a combination of cash and equity guarantees. More than half of Greensill’s earnings for 2018 went to warrants worth $ 25 million that gave Greensill the right to own shares in the coal mining company, the Journal previously reported.

Last summer, Bluestone’s general counsel told the Journal that the company had been working with Greensill since 2018 to improve its working capital position. The portion of the fees he paid Greensill that year in stock warrants “was very soon redeemed in full in cash,” he said, without specifying further.

Another crucial relationship for Greensill has been with Mr. Gupta and his GFG Alliance group of companies, according to people familiar with the matter. Germany’s banking regulators banned activity at a Greensill-owned bank after an audit failed to provide evidence of accounts receivable purchased from the GFG Alliance, which owns steel mills and other industrial assets in a dozen countries.

A GFG spokesperson said that its operations are operating normally and that it is making progress in its discussions to secure financing from other financial institutions.

Vodafone has been a Greensill customer for a long time. A supply chain finance fund that Greensill created with GAM Holdings AG was referred to within both companies as “Vodafund” because Vodafone was an investor in the fund and received funding from it, according to people familiar with the relationship and an email. . reviewed by the Magazine.

Vodafone is no longer an investor in the fund, according to the company spokesperson.

The Journal reported Friday that Greensill used Credit Suisse funds to lend to two of its largest external backers, SoftBank Group. Body

Vision Fund and General Atlantic.

Write to Duncan Mavin at [email protected] and Julie Steinberg at [email protected]

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