InfraBuild to buy three companies from parent GFG after a strong start to the year

Sanjeev Gupta’s steel manufacturing business will seek to raise new finance to buy three companies off parent GFG Alliance after a strong first quarter.

GFG Alliance exectuive chairman Sanjeev Gupta.

Sanjeev Gupta’s Australian steel manufacturing business will look to raise new finance to buy three US businesses from parent company GFG Alliance after posting a strong start to the year.

InfraBuild said it had generated net revenues of $1.529bn in the first quarter of the financial year, up 2 per cent, with EBITDA 24 per cent higher at $197m.

The company’s most recent financial report lodged with the corporate regulator shows it made a net profit for the 2022 financial year of $283.9m, up from $115.2m, on revenues of $5.99bn.

InfraBuild makes and distributes steel long products at its Australian operations in Newcastle, Laverton, Geelong and at other Australian sites and has 26 scrap metal recycling centres across Australia and centres in Poland, the US and Hong Kong.

The company said in a statement on Thursday that it had benefited from strong market conditions, and following the repayment of its asset-based lending facility in September, it would look to raise new finance to buy three companies from GFG Alliance. These were Keystone Consolidated Industries – which operates in Illinois, Ohio and New Mexico – Johnstown Wire Technologies – in Pennsylvania and Ohio – and the Georgetown steelworks in South Carolina. Acquisition prices for the businesses were not revealed.

“Under the potential acquisition, InfraBuild would acquire the businesses from its parent company, GFG Alliance, to create a vertically integrated electric arc furnace long steel producer with leading market positions in Australia and the United States, providing strong synergies across its product portfolio,’’ the company said.

InfraBuild chief executive Dak Patel said, following the company’s record 2022 financial year performance it was keen to maintain its momentum.

“With our intended acquisitions in the US wire and bar market we will be building on our core competencies, expanding our existing US operations, diversifying our revenue streams and gaining exposure to the growing US infrastructure market,’’ Mr Patel said.

“These acquisitions are the right long-term fit for InfraBuild and would combine two businesses with a shared mission for sustainable steel production and strong market positions in the Australia and the USA.”

The company’s financial report shows it also bought two US recycling businesses for $US24.8m ($36.9m) and Liberty Metal Recycling Europe for $US20.1m, both from “a group under the common control of Sanjeev Gupta’’. Infrabuild also bought a “strategic landholding’’ at Newcastle for $43.6m during the financial year.

The news from InfraBuild follows an announcement from Mr Gupta’s global Liberty Group on Tuesday that it was poised to restructure an estimated $US5bn in debt after striking an agreement with the main creditors of Greensill Capital and Credit Suisse Asset Management.

Liberty, which owns the Whyalla steelworks and is part of Mr Gupta’s GFG Alliance, said late Tuesday that it had signed a term sheet “subject to contract” to restructure the debt.

The company declined to release an exact debt figure on Tuesday however it has previously been reported that its debts ran to something in the order of $US5bn globally.

Liberty was plunged into chaos in March last year when Greensill, which operated a complex supply chain financing model, failed, with the collapse threatening to spill over into Liberty’s global network of steel, mining and industrial businesses, which employ tens of thousands of people.

Greensill was Liberty’s key financier, and its failure left the company with a cash flow and debt servicing crisis.

Liberty set up a Restructuring and Transformation Committee, tasked with sorting out the debt problem, which on Tuesday said it had made “a major step in the group’s refinancing’’.