Credit Suisse and West Virginia governor Jim Justice are close to a settlement over $690mn the US politician’s mining company Bluestone Resources owes the Swiss bank’s clients, according to people familiar with the matter.
Bluestone borrowed heavily from Greensill Capital, the failed UK supply chain finance firm that relied on some of Credit Suisse’s wealthiest clients for a significant chunk of its own funding.
Since Greensill’s collapse in March 2021, Credit Suisse has been under pressure to recover money that the supply chain firm lent via a $10bn group of funds set up by the Swiss bank for 1,200 of its richest clients.
Under the deal being thrashed out between Justice and Credit Suisse, Bluestone mines would step up production and make regular cash payments to the Swiss bank.
Credit Suisse would also have an option on funds raised from a potential sale of the mines at a later date, the people familiar with the matter said. The settlement could be signed within weeks.
The progress towards a deal comes after an aborted settlement last September, when Justice proposed paying the bank $300mn and offering half the proceeds of the sale of the mining business to settle the debts. But the offer relied on Bluestone negotiating a $300mn refinancing deal from an unnamed party, which failed to materialise.
In contrast, the new deal does not rely on third-party financing. The terms of the deal have been made more palatable to Credit Suisse due to the soaring price of coal, which Bluestone specialises in.
Coking coal, which is used to make steel, has surged almost 350 per cent over the past year, according to S&P Global Platts.
The explosive increase is due to a combination of economies reopening after Covid-19 lockdowns and a supply squeeze exacerbated by the turmoil unleashed in commodity markets by Russia’s invasion of Ukraine.
“Credit Suisse Asset Management continues to pursue all available avenues for recovery of the funds on behalf of our investors; this remains a priority,” the bank said in a statement.
Bluestone’s lawyer did not respond to a request for comment by the time of publication.
Bluestone is one of three chief targets for Credit Suisse as it looks to recover money for aggrieved clients — a process the bank recently admitted could take at least five years. In total, the bank is attempting to recover $2.7bn through an arduous series of debt renegotiations, legal cases and insurance claims.
Credit Suisse is also pursuing embattled UK metals tycoon Sanjeev Gupta for $1.3bn his GFG Alliance borrowed from the bank’s funds through Greensill. Having spent more than a year seeking a settlement with Gupta, Credit Suisse negotiators have lost patience, according to people familiar with the matter.
Last week GFG companies were the subject of twin legal cases that could result in his businesses being wound up. Gupta gave evidence in a court in Belgium last week in a bid to overturn an order to put his company’s Liège operations into liquidation. Meanwhile, in London, a separate court hearing unfolded behind closed doors in relation to winding-up petitions against three GFG companies.
The Belgian case is due to continue this week. The London hearing has concluded, but the judge is not expected to state whether the companies will be subject to insolvency proceedings for a couple of weeks.
A third target for Credit Suisse is the $440mn owed by collapsed US building company Katerra, a former Greensill client. The Swiss lender has begun legal action against SoftBank, the Japanese conglomerate whose $100bn Vision Fund backed Katerra.
Credit Suisse has tried to subpoena documents through California and Arizona courts ahead of a potential lawsuit against SoftBank in London. SoftBank has attempted to block the request and the next hearing in California is due to take place on May 20.
Additional reporting by Neil Hume in London