West Virginia Gov. Jim Justice, who is already dealing with lawsuits concerning his coal companies, is now personally responsible for almost $700 million in loans the firms took out from Greensill Capital, according to sources familiar with the transactions.
The Republican governor and his wife guaranteed the loans, reports The Wall Street Journal. The other lawsuits aren’t related to the Greensill Capital transactions, but concern payment contracts that were breached or from the companies’ failures to deliver coal.
Greensill had packaged the loans and sold them to investment funds being managed by Credit Suisse Group. The two entities ran $10 billion in supply-chain funding that financed several companies, including Justice’s Bluestone Resources Inc., which received about $40 million in financing from one of the funds.
Justice has settled several other cases for alleged nonpayment of bills, court records show. In Greensill’s case, Bluestone repaid the company with a combination of equity warrants and cash, but it was not clear if Greensill got the warrants as payment for the financing from Credit Suisse, reports the Wall Street Journal.
Meanwhile, Credit Suisse froze the investment funds in March, and has been in talks with Bluestone and others to recoup the money, and has named the coal company as one of three large Greensill fund borrowers in its recovery efforts. The other two are metals magnate Sanjeev Gupta’s GFG Alliance and the SoftBank Group Corp.-backed Katerra, a construction startup.
Bluestone said in a lawsuit in March, filed in a New York federal court against Greensill, that it had not expected to start paying back its loans until at least 2023.
Bluestone and Justice did not return requests for comment.
Greensill at one point was said to have been worth as much as $40 billion in a potential initial public offering but ended up in bankruptcy in March when a key insurer backing up its loans was lost.
Bluestone was one of one Greensill’s largest clients, but Credit Suisse in a recent notice to investors said the Justice-owned company owes the nearly $700 million in loans.
The governor and his wife provided the guarantees, according to people familiar with the loans, and covered unlimited amounts. Bluestone’s chief executive, Justice’s son Jay (James Justice III) guaranteed the loans up to a certain limit, and all three people are listed as plaintiffs in the lawsuit against Greensill.
The Greensill issue caused Justice to fall off Forbes’ annual billionaires’ list, putting the once-Democrat leader’s net worth at $450 million down from $1.2 billion in April 2020. In addition to the coal companies, farms, and other businesses the governor owns, he also owns the Greenbrier resort in White Sulphur Springs, West Virginia.
Bluestone started its relationship with Greensill in May 2018, and the coal companies got funding over three years. After the first loans matured, Greensill used a “cashless roll” to replace them, according to the coal companies’ lawsuit.
Justice’s companies have a key role in steelmaking, mining more than $1 million tons of coal in 2018, but metallurgical coal prices dropped sharply last year. Recently, however, the prices rebounded to pre-pandemic levels.
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