Vulture funds circle Sanjeev Gupta’s Whyalla assets as pressure mounts

GFG Alliance is refusing to comment suggestions a trio of financiers is in talks with the embattled Whyalla steelworks owner, as a key court date creeps closer.

GFG Alliance executive chairman Sanjeev Gupta.

A string of specialist investment funds are circling the Whyalla steelworks, as a court hearing about a push to wind up key parts of the Australian operations of the under pressure Sanjeev Gupta creeps closer.

A spokesman for GFG declined to comment on an offshore report that distressed asset specialists White Oak Global Advisors, Bain Capital Credit and Oaktree Capital Group were doing due diligence on the $430 million in Greensill debt tied to Whyalla’s owner GFG Alliance.

Private equity firm Brookfield and another international hedge fund have also previously been said to be in the mix.

Sources have told The Australian that White Oak is likely in talks with GFG, however the involvement of Bain, which bought Virgin Australia out of liquidation for $3.5 billion, is less certain.

There is speculation Oaktree, which scooped up the assets of Blue Sky Alternative Investments after that company failed, could be interested in GFG’s Whyalla assets which include the steelworks, port, and iron ore operations.

GFG is facing an early stage court hearing on May 6, related to Credit Suisse’s bid to appoint liquidators to GFG assets including the Whyalla steelworks and the Tahmoor metallurgical coal mine.

Mr Gupta, in an open letter earlier this month, sought to reassure workers at his Australian operations that he was in the “advanced stages” of securing refinance for the $US5bn ($6.56bn) in debt he owes Greensill – the Australian supply chain finance company whose creditors voted to wind it up earlier today.

Mr Gupta has previously said on many occasions that the Whyalla steelworks and iron ore operations are profitable, and the Federal Government also confirmed earlier this month it was working on a backup plan should efforts to refinance GFG’s Australian operations fail.

The Steelworks in Whyalla, which GFG Alliance bought in 2017. Picture Simon Cross

Citibank, acting on behalf of Credit Suisse, has sought to get ahead of any refinancing plans, filing a winding up in insolvency application for OneSteel Manufacturing and Tahmoor Coal earlier this month.

That matter will head to court on May 6, however it is understood that it will be a directions hearing on that date, rather than a hearing.

GFG acquired the Whyalla steelworks and other assets from Arrium in 2017 after it fell into administration.

Mr Gupta was hailed a saviour of the town, and at a “Big Reveal” in December 2018 plans were unveiled to pump $600m into upgrading the steelworks, bolstering its capacity and securing 2500 jobs, while feasibility studies for a massive new steelworks producing up to 10 million tonnes per annum were worked through.

Plans to build a 280MW solar farm had already been announced, along with possible hydropower ambitions.

While upgrades have returned the steelworks to profitability according to GFG, the solar and wider power plans remain in the planning stages.

On the Greensill front, creditors voted on Thursday morning to wind up its Australian business after it attracted no buyers.

Creditors voted 23-0, with three abstentions, to liquidate the finance company.

Liquidation was the only option after no buyers came forward to take on the firm, which has debts estimated at $4.9bn.