InfraBuild has struck an agreement to refinance $US150m in debt

Sanjeev Gupta’s InfraBuild has struck two key agreements which should avoid a possible default on its debts but the $US150m in new debt at the heart of the deal is not yet settled.

UK industrialist Sanjeev Gupta.

Sanjeev Gupta’s InfraBuild has struck a debt restructuring deal with a majority of its bondholders and agreed to another extension to the deadline to file its books, removing a trigger which could have pushed the steel products company into default.

The company said on Thursday it had entered an agreement with a majority of its bondholders - who are owed $US550m according to Fitch Ratings - to push back the due date for the company’s FY24 financial report to the end of May.

It had also agreed to a new, $US150m debt finance facility, which would roll over a facility which would fall due in May next year.

But while that agreement has been struck, it has not been finalised, with the company saying this would happen “on or about April 18, 2025’’.

“Once the syndicated facility agreement has been prepaid in full, the notes will be secured on substantially all assets of the issuer and the guarantors on a first lien priority basis,’’ InfraBuild said.

Fitch said earlier this week that InfraBuild’s failure to lodge its books by March 31 could place it in default on its senior secured notes, and downgraded InfraBuild Australia’s credit rating from CC to CCC—.

Under the Fitch ratings system, this indicates that the debt has a “very low margin for safety’’ and “default is a real possibility’’.

Thursday’s announcement marks the third time the date for the filing of the books has been pushed back, with an initial extension to the end of January later extended until March 31.

Sanjeev Gupta in his Adelaide offices late last year.

The ability of InfraBuild to file its financial reports was disrupted by the South Australian government pushing the Whyalla steelworks into administration, which in turn disrupted a deal being hammered out in the UK by Mr Gupta’s broader GFG Alliance group which owned both InfraBuild and the steelworks, over $US5bn owed to its former financier Greensill.

Fitch warned this week that InfraBuild was at risk of breaching the covenants around the $US150m asset-backed term loan (ABTL) within the next six months unless earnings recovered. Breaching those covenants could in turn lead to “payment acceleration and a liquidity crunch’’.

An unidentified spokesperson representing a “sub-set” of the bondholders said in the statement provided by InfraBuild on Thursday that they back the company.

“We are supportive of the shareholder’s vision for the company and have confidence in the management of InfraBuild,’’ the spokesperson said.

“We’re pleased to work together for a successful outcome that enhances the credit profile and liquidity of the business.

“InfraBuild is a market leader, with a strong management team and board - which is well-positioned to capture future growth alongside their end markets.”

InfraBuild chief executive Francisco Irazusta said the company was “a strong and well-established business”, and it was “business as usual” at the company.

“This agreement signifies the robustness and value of InfraBuild providing additional liquidity and strengthening our balance sheet which will allow us to focus on continuing to deliver high quality steel products and services to our customers,’’ he said.

“InfraBuild is an integral part of Australia’s construction and engineering industry as it builds the nation’s future on sustainable steel.

“Despite the challenging global operating environment, InfraBuild continues to invest through the cycle and deliver on its long term strategy focusing on sustainability-driven product and service innovations, digitisation, improving operational efficiencies, maintaining cost discipline and enhancing our customer offerings for an expected market recovery.”

In early March a meeting of the creditors of OneSteel Manufacturing, which owns the Whyalla steelworks and associated iron ore mines, heard that the company owed $1.3bn to creditors, including more than $500m being claimed by InfraBuild.

Originally published as InfraBuild has struck an agreement to refinance $US150m in debt