Credit Suisse has signed an agreement with the mining company owned by West Virginia governor Jim Justice to start recouping part of the $690mn that Bluestone Resources owes the Swiss bank’s clients.
Bluestone borrowed heavily from Greensill Capital, the failed UK supply chain finance group that relied on some of Credit Suisse’s wealthiest clients for a significant chunk of its own funding.
In a deal announced on Friday, Bluestone will begin making regular payments to the Swiss bank’s clients this month, reaching up to $260mn in total.
As the Financial Times reported last month, the Justice family has also agreed to share the proceeds of any sale of the business with Credit Suisse clients, though a person briefed on the arrangement said the split had not yet been defined.
If there are still debts outstanding after Bluestone is sold, the bank plans to continue trying to recoup the losses through insurance claims that it has already filed.
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. The bank has said the process could take as long as five years.
“This is further evidence of our determination to prioritise the return of cash to investors in the supply chain finance funds,” said Ulrich Körner, chief executive of Credit Suisse Asset Management. “This agreement is intended to secure further recoveries for the benefit of those investors.”
So far, it has recovered $7.3bn. 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.
The Bluestone settlement is the result of year-long talks between Credit Suisse negotiators and the Justice family.
Last September, 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.
Bluestone’s chief executive James Justice III, the son of the governor, said: “We have negotiated a settlement which enables us to take advantage of the favourable market conditions for met coal and secure the position of the mines, and the employees and communities who depend on them, for the foreseeable future.”