Tahmoor Coal is facing the possibility of liquidation, as legal action against its billionaire owner threatens thousands of jobs.
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Citibank, acting on behalf of Credit Suisse, is taking Sanjeev Gupta to court in an attempt to wind up two of his operations - OneSteel Manufacturing and Tahmoor Coal.
If successful, the move could trigger the appointment of liquidators to the Tahmoor coal mine, which employs about 400 people, and the Whyalla steelworks and its associated mines.
Tahmoor Coal is seeking approval for its Tahmoor South project to extend the life of the mine for 10 years.
The legal action is the latest setback for Mr Gupta's global business after the collapse of one of its major lenders, Greensill, last month.
Credit Suisse is trying to recoup some of the money it is owed by breaking up Mr Gupta's Australian assets.
But his UK-based company, GFG Alliance, has vowed to vigorously defend the court action, saying it does not conduct any financing with Credit Suisse.
A company spokesperson said GFG Alliance was in "constructive discussions" with Grant Thornton, Greensill's administrators, and other stakeholders to negotiate a solution.
"The Australian businesses are performing well and generating positive cash flow, supported by the operational improvements we've made and strong steel and iron ore markets," the spokesperson said.
The case is set for a directions hearing on May 6.
- With AAP
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