There is a small ray of hope for the stricken big bank: Bluestone Resources, a major creditor of Credit Suisse’s struggling supply chain funds, has agreed with the bank to repay $260 million.
Credit Suisse has made further progress in processing the greensill.
Credit Suisse (CS) takes another step towards solving its greensill problem. Coal miner Bluestone Resources has reached an agreement with its creditors, most notably two CS supply chain funds, on the staggered repayment of part of its debt. CS announced this on Friday afternoon.
Bluestone will pay creditors in installments of up to $320 million; this from a total debt of $850 million. 81 percent or nearly $260 million of this will go to the CS funds, the rest to the creditors of Greensill Bank, which also faltered. In addition, should the Bluestone mines be sold, the creditors and Bluestone’s owning family would split the proceeds. CS will try to collect the remaining amount from the insurance company.
As a reminder, the supply chain funds had invested a total of approximately $10 billion in assets from CS clients in Greensill Capital financial products. So far, customers have received about 68 percent of this amount back. Another 5 percent have already been secured but have not yet been distributed. Together with the repayments by Bluestone, CS would have secured just over three quarters of the fund’s assets.
Bluestone Resources is one of the three major debtors to the funds; the other two are metals conglomerate GFG Alliance, whose Australian arm has a similar payback agreement, and construction startup Katerra. Bluestone is owned by the family of West Virginia Governor Jim Justice. The coal miner once relied heavily on Greensill Capital for financing.
In February 2021, when Greensill Capital could no longer find insurance partners willing to insure its products, the company had to cease operations. For his part, his major debtor, Bluestone, was also unable to repay his debts quickly. Tough negotiations with CS followed. The coal miner had even filed a lawsuit against Greensill, alleging that it had been deceived in relation to the repayment terms.
It was heard a few weeks agothat this litigation is drawing to a close. Against this background, you may also have to classify the fact that the agreement reached between Bluestone and the creditors initially only includes 320 of 850 million dollars.
Last but not least, Bluestone and its creditors benefit from the fact that coal prices have almost tripled since the beginning of the year.
The good news comes at just the right time for Credit Suisse. The Greensill case is just one element in a long and costly series of failures; Recently, the bank was no longer doing well in its core business either. Once again, it had to issue a profit warning for the coming quarterly financial statements. The share is currently trading at an almost record low of 5.72 francs. Next Tuesday, the CS leadership wants to explain to its investors in a strategy “deep dive” how it can work more profitably again.