Bain eyes Crown and InfraBuild

Bain Capital may be considering a play for Crown. Picture: Gaye Gerard

Only months after striking a $3.5bn agreement to buy collapsed airline Virgin Australia, Bain Capital appears to be back in dealmaking mode, with both Crown Resorts and InfraBuild in its sights.

Sources say that Boston-based Bain is firming as the frontrunner to refinance Sanjeev Gupta’s Australian steel product manufacturer InfraBuild.

Bain has also recently been looking to put a funding proposal to Crown Resorts similar to that already on the table from its private equity rival Oaktree.

Oaktree is also understood to have been competing strongly to become part of an InfraBuild refinancing plan, sources say.

But with respect to Crown Resorts, some believe that unlike Bain, which hopes to just do a funding deal for Crown Resorts to enable the $8.8bn company to buy back the stake of 37 per cent shareholder James Packer, Oaktree’s ultimate end game is to buy the casino operator.

Oaktree had earlier proposed a $3bn line of credit should Crown Resorts choose to buy back “all or some” of Mr Packer’s stake.

Oaktree has formally come forward with the proposal as Blackstone has offered to buy Crown for $12.35 a share and Australian rival The Star Entertainment Group has put forward a merger plan where Crown shareholders get 2.68 Star shares for every Crown share held, equating to $10.88 a share on Wednesday night, not factoring in the alternative offer involving a small cash component.

Apollo is also understood to have expressed interested in offering mezzanine finance to Crown, and others are said to be circling, at a time when the battle for the company has a long way to play out.

With respect to InfraBuild, the understanding is that the $2bn Australian steel manufacturer and construction materials provider has high-yield bonds worth $US325m ($417m).

It also has $US250m worth of loans through a working capital facility with JPMorgan, a small portion of which has been offloaded to Japanese bank Nomura.

However, some suspect the JPMorgan debt may not be refinanced given it is not considered to be expensive, only the bonds.

One challenge is that collapsed lender Greensill embarked on a share mortgage deal with Mr Gupta’s GFG Alliance around February over InfraBuild where it ultimately has security over the group’s assets.

Still, InfraBuild is a strong performer amid a period of soaring steel prices and several parties would be eager acquirers if it were not for the risks of potential forced assets sales with it being caught up in Greensill’s downfall.

Parties that have been interested in buying InfraBuild are said to have included Brookfield, while Centrebridge is said to have also put forward a refinancing proposal.

Industry rival BlueScope Steel would also probably be a keen buyer of the business once the funding challenges had been addressed, although it may face opposition from the Australian Competition & Consumer Commission.

Mr Gupta has counted Greensill as its major lender and has been working to refinance its operations in Australia, with $US5bn of debt refinancings needed across his global empire.

His business has accounted for about 60 per cent of Greensill’s overall revenue.

Some suggest cross guarantees exist between InfraBuild and Mr Gupta’s Whyalla steel works in Australia.

Whyalla has a proposal on the table for a $420m refinancing through asset-backed financier White Oak Global Advisors.

However, White Oak is still carrying out due diligence on what is currently a profitable business and a deal is yet to be finalised.

White Oak was originally a lender to Whyalla, before Greensill stepped in to take its place. The fund counts former Bank of America banker Ken Pereira as its Sydney-based managing director.

Credit Suisse has sought a winding-up order of Mr Gupta’s $US6bn global metals business Liberty Commodities in a quest to secure funds it is owed by Greensill.