GFG Alliance executive chairman Sanjeev Gupta tells senior managers companies ‘performing well’ despite financing uncertainty

Sanjeev Gupta says his companies, including the Whyalla steelworks, are ‘performing well’ despite financing uncertainties but has a word of caution for his global managers.

Sanjeev Gupta has written to senior management spanning his global empire, telling them GFG Alliance as a whole is “performing well”, but exhorting them to manage their cash flow prudently while new financing for the conglomerate is sought.

Mr Gupta told leaders at GFG, which owns the Whyalla steelworks and iron ore mines, that over the past year, efficiency at its major businesses had been significantly improved and “most of our operations are generating positive cashflows also benefiting from strong steel, aluminium, and iron ore markets’’.

In Australia, the Infrabuild business “has had its best half year results since we acquired it in 2017, and Whyalla is operating profitably for the first time in many years’’.

“Our major steelworks in Ostrava and Galati are both operating profitably after successful turnaround efforts and the ALVANCE businesses at Dunkerque, Lochaber and Duffel are also doing very well.’’

GFG is looking a new financier, after Greensill Capital was placed in administration on Monday.

Mr Gupta said local business units needed to closely manage their finances while new credit was sorted out.

GFG Alliance executive chairman Sanjeev Gupta has told his managers globally the company is ‘performing well’ but to take prudent steps to manage their cash positions. Photo: Tait Schmaal.

“While we bridge to new long term funding arrangements post Greensill there will be less group support available,’’ he said.

“We are therefore implementing careful plans to make these businesses more financially sustainable by working with management, unions, customers, and suppliers to boost cash flow.

“On refinancing, we are enthused by the amount of offers that we have received that reflects the strength of our business. However, given the scale of our operations this process will take some time to organise.’’

GFG has appointed a team of advisers including PJT Partners, Alvarez & Marsal and Norton Rose Fulbright, “to support our refinancing efforts and negotiations with Greensill’s administrators’’.

“On refinancing, we are enthused by the amount of offers that we have received that reflects the strength of our business,’’ he said.

“However, given the scale of our operations this process will take some time to organise.

“Hence, we are asking all of our businesses to take prudent steps to manage their cash positions carefully and reduce their call on group resources while this process takes place.

“These are sensible actions that will help us to maintain a healthy buffer.

We are also having constructive discussions with Greensill’s administrators. We hope to update you soon on our progress in negotiating a formal standstill agreement that would put on hold arrangements between the two parties and allow both sides more time to assess and negotiate next steps.’’

Mr Gupta’s email struck an optimistic tone, while noting it had naturally been an “unsettling situation for all our stakeholders’’.

“This week we have held discussions with trade unions, written to our customers and suppliers, held investor meetings and briefed governments in all our operating territories,’’ he said.

“I take some comfort from the overwhelming support we’ve been given so far, and I feel there is a determination across the board to get behind our people and businesses.

“Over the past few years, we have gone against the grain to revitalise industrial communities that were at risk of being left behind. We’ve built an amazing group together with 35,000 people and many more relying on us right around the world. I will be working around the clock to ensure our people and communities have a sustainable future.’’