Sanjeev Gupta's InfraBuild needs to file its books soon or risk triggering a debt avalanche

A $US550m debt default at GFG Alliance company InfraBuild could be triggered if the company doesn’t file its already-delayed financial accounts before the end of March.

Sanjeev Gupta, executive chairman of GFG Alliance.

A $US550m debt default at GFG Alliance company InfraBuild could be triggered if the company doesn’t file its already-delayed financial accounts before the end of March, ratings agency Moody’s says.

Liberty Primary Metals Australia, which operates the Whyalla steelworks, and long steel products maker InfraBuild — both companies in Sanjeev Gupta’s beleaguered GFG Alliance group — failed to file their 2024 financial year accounts by the end of December as required.

Moody’s, which on Monday further downgraded InfraBuild’s debt rating to a lower level of junk, said the amount GFG will have to pay to settle debts with its creditors on a global basis “still remains uncertain, though we understand that constructive negotiations are ongoing’’.

“InfraBuild’s auditors have indicated a higher bar for audit evidence related to the GFG settlement, which has led to a delay in publishing the company’s fiscal 2024 audited financial statements,’’ Moody’s says.

“InfraBuild has received consent from noteholders to extend its reporting obligation deadline, which is now the end of March.

The Whyalla steelworks on February 7, 2025. Picture: Dean Martin

“A delay in issuing the audited statements beyond this date could lead to a default event on the $US550m senior secured notes.

“We would expect InfraBuild to launch another consent process to further extend this deadline if it is unable to publish its accounts before the deadline.”

Moody’s on Monday said it had downgraded InfraBuild’s credit rating to Caa2 from Caa1, with both ratings indicating a very high credit risk.

“InfraBuild’s fiscal 2025 first quarter results were below our expectations, with reported revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) falling 10 per cent and 55 per cent year-on-year, respectively, as Australia’s sluggish residential activity and competition from imports continue to impact steel volumes sold while steel prices and global spreads remain relatively low,’’ Moody’s said.

“Furthermore, unplanned production stoppages at its affiliate, and supplier, Whyalla steelworks, has created further cost pressures resulting from disruption to the company’s supply chain, however we expect this to normalise as Whyalla’s blast furnace ramps back up. “Although we expect some EBITDA recovery, the pace and magnitude of this remains uncertain and we expect the steel operating environment to remain challenging throughout 2025.’’

Moody’s said it considered InfraBuild’s capital structure to be unsustainable “given its materially high interest burden, which along with its decline in earnings, will result in ongoing cash burn over the next 12-18 months’’.

“InfraBuild has flagged potential asset sales, including its US recycling assets, which if executed will support short-term liquidity,’’ Moody’s said

“Should the company fail to execute on these asset sales, we expect that without a significant turnaround in operating performance, the company will breach its month-end liquidity covenant under the asset-backed term loan agreement.

“We understand that as part of the amendments executed in October 2024, InfraBuild will be allowed to draw on a portion of funds held in escrow should a breach occur, which may provide additional liquidity support if needed.’’

Mr Gupta’s business empire has come under increasing pressure in recent days with revelations LPMA owes tens of million in royalties to the South Australian government and another $15m to SA Water, with the company also standing down workers at its Tahmoor coal operations, where it is also understood to have racked up significant debts.