Boral and Bansal in the spotlight as a sale of GFG’s InfraBuild looms

SGH chief Ryan Stokes. Picture: John Feder.

Any suitor interested in buying the InfraBuild steel business will need to understand the business is severely undercapitalised.

But if there’s one executive who can get the business back on track and extract value, it’s Vik Bansal.

He is the chief executive of the country’s largest building materials provider Boral, backed by the Stokes family-backed SGH Holdings.

And he was also previously the boss of InfraBuild, one of the country’s largest steel manufacturers and distributors.

InfraBuild sits within the empire of Sanjeev Gupta’s GFG Alliance, which still owes $8bn to the interests of the failed financier Greenhill.

The collapse of GFG’s Whyalla steelworks in South Australia has triggered technical debt defaults within InfraBuild.

Various parties believe they have security over InfraBuild assets and there are thought to be parent guarantees to other parties within GFG.

This has prompted some to think an administration or receivership of InfraBuild is inevitable, and that Boral or SGH could then take a look.

Kerry Stoles and his son Ryan, the SGH chief, are known to be tough negotiators and will only be interested if it’s cheap.

But InfraBuild is a highly sought-after business. This column recently reported that private equity firm Apollo was keeping an open file on the company.

Having InfraBuild within Boral or the SGH stable would have a number of benefits.

With construction companies under pressure, having a larger suite of offerings could help Boral maintain contracts.

InfraBuild is considered Gupta’s best business and a strong cash generator.

It was previously thought to be worth $6bn.

InfraBuild’s bond holders in 2023 were said to be owed $US350m.

In addition, there are loans on assets worth about $200m.

According to a US offer memorandum for the 12 months to March last year, InfraBuild generated $411m in earnings before interest, tax, depreciation and amortisation, but that is believed to have fallen since then.

Its debt was about $1.5bn, including leases and loans from related parties.

Bondholder FitzWalter Capital Partners, backed by former Macquarie executive Ben Brazil, is demanding an immediate $800m repayment from GFG Alliance.

The latest documents show InfraBuild posted an $81m half-year loss.

InfraBuild’s steel distribution business is Australia’s largest processor and distributor of long-steel products. It produces 1.4 million tonnes of recycled steel across the country.

As reported by The Australian last week, InfraBuild is a creditor to Whyalla steelworks, named One Steel Manufacturing, with administrator KordaMentha assessing its debts to be $1.34bn.