West Virginia Governor Jim Justice is personally responsible for securing $ 700 million in Greensill loans

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West Virginia Governor Jim Justice personally received nearly $ 700 million in loans that his coal companies took from the now defunct Greensill Capital, according to people familiar with the loans and documents described by The Wall Street Journal.

Mr. Justice’s unreported personal loan guarantee is putting financial pressure on the popular Republican governor. He is also involved in unrelated lawsuits alleging that parts of his vast network of coal companies violated payment contracts or failed to supply coal.

Greensill packed up the loans and sold them to investment funds under management

Credit Suisse Group AG

CS -2.12%

Credit suisse

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and Greensill managed $ 10 billion supply chain finance funds that extended financing a number of borrowers

The Swiss bank froze investment funds in March and is in talks with Mr. Justice’s Bluestone Resources Inc. and other borrowers to get the money back and heal investors, people familiar with the discussions say.

Credit suisse

is under pressure to return the money quickly and named Bluestone as one of three major borrowers from Greensill funds that he identified in his recovery efforts.

Bluestone did not expect to begin repaying Greensill loans until 2023, the company said. the lawsuit was filed in March in federal court in New York, who accused Greensill of credit fraud.

Greensill was once a popular private finance firm. Its destruction resulted in financial damage away from the UK headquarters.


Photo:

Oli Scharf / Agence France-Presse / Getty Images

Bluestone’s general counsel and external attorney representing Bluestone did not respond to requests for comment. Requests for comment from Mr. Justice’s representative have not been returned.

Greensill was once a popular private finance firm whose initial public offering, according to bankers, could be worth $ 40 billion. it attracted investments of

SoftBank Group Corp.

before crash to bankruptcy in March, when he lost the key insurance that supported his loans.

Greensill specializes in supply chain financing, a kind of cash advance that helps companies manage cash flow

His unraveling is seeded financial damage far from UK headquarters, which led to the collapse of the banks in Germany and Italy. It caused a black eye

Credit suisse,

which sold Greensill assets to investors as relatively safe, and it jeopardized finances British-Indian steel tycoon Sanjeev Gupta.

Bluestone Companies were one of Greensill’s largest clientsThis was previously reported by the magazine.

Credit Suisse said in a recent investor notice that Bluestone owes nearly $ 700 million in loans.

In a notice to investors, Credit Suisse said Bluestone owed nearly $ 700 million in loans.


Photo:

Dan Kitwod / Getty Images

Justice’s companies own several coal-related businesses and have settled a number of alleged non-payment cases in recent years, according to court records posted on the investigative journalism website ProPublica.

According to some people familiar with loans, guarantees were provided by Mr. Justice and his wife and covered unlimited amounts. Mr. Justice’s son and Bluestone chief executive James K. Justice III has guaranteed loans up to a certain limit, one of the people said, although the figure is unrecognizable. All three are listed as plaintiffs in the lawsuit against Greensill.

Borrowers provide personal guarantees for business loans to provide lenders with added convenience in the event of default.

Forbes removed Mr. Justice from its billionaire list this year due to Greensill’s failure. He now estimates his net worth at $ 450 million, up from $ 1.2 billion in April 2020. His fortune is linked to dozens of coal companies, farms, and other businesses that he and his family control, including the famous Greenbrier Resort in White Sulfur Springs, West Virginia. …

Mr Justice was elected in 2016 as a democrat… It joined the Republican Party in 2017 and is an ardent supporter of the former president

Donald Trump… He is regarded by his supporters as a man of the people despite his wealth and political power, and he still coaches the women’s basketball team at Greenbrier East High School.

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West Virginia voters were not deterred by reports of financial distress from his companies, which re-elected him in 2020 with 65% of the vote. According to intelligence firm Morning Consult, his approval rating is 62%.

“The governor’s business interests are not very important in this state, there just isn’t much of a concern,” said Marybeth Beller, associate professor of political science at Marshall University. “The former president had all sorts of business problems, and it didn’t really matter to the West Virginians. Jim Justice is following his example. “

According to Bluestone’s lawsuit, Bluestone and Greensill began their relationship in May 2018 when Greensill vice chairman Roland Hartley-Urquhart contacted through a common business partner.

The Bluestone companies received funding for a three-year period. When the first batch of loans fell due, Greensill replaced them with new loans in what Bluestone claims was called “cashless settlement.”

Many of the loans were secured by “alleged receivables” that had not yet been generated from a list of “potential buyers”, some of whom may never have become Bluestone customers, the lawsuit said. It is not known exactly how Bluestone used the loan funds.

Mr. Justice’s companies play a significant role in the coal market for steelmaking. According to S&P Global Market Intelligence, in 2018 they produced more than 1 million tons of coal, mainly metallurgical. The largest US coal company produced 12 million tonnes of coal in 2019.

Metallurgical coal prices fell sharply last year, but recently recovered to pre-pandemic levels as the economy recovered.

Bluestone has a separate financial dispute with Caroleng Investments Ltd., a British Virgin Islands company. Earlier this month, a federal judge in Delaware ordered Bluestone to post a $ 10 million bond in connection with its 2015 purchase of coal assets from Caroleng. In January, Bluestone’s general counsel told the court that an earlier award in Caroleng’s favor would lead to embarrassment, the court file said.

In another case, a federal judge in Delaware found in March that Justice failed to deliver nearly 700,000 tons of coal to a Pennsylvania exporter between 2017 and 2018. He ordered the company and Mr. Justice to pay the exporter $ 6.8 million. Mr. Justice personally guaranteed the supply of coal.

Mr. Justice and company tried to suspend the execution of the judgment.

Write to Julie Steinberg at julie.steinberg@wsj.com and Duncan Mavin in duncan.mavin@wsj.com

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