Prospective buyers are believed to have started paying an increasing amount of attention to $6bn Australian steel manufacturer InfraBuild, with a growing view that a collapse of the Sanjeev Gupta-backed company is inevitable.
InfraBuild had about $2bn of debt in 2022 and since then it is understood to have grown. Now some lenders are offering loans for sale at about 70c in the dollar.
Private equity firms are looking at the debt but the only group considered in a position to take on such a high-risk investment is a local firm such as Gordon Brothers, a financier to failed logistics firm Scott’s Refrigerated Logistics. Scott’s was formerly owned by Anchorage Capital Partners.
Platinum Equity looked previously and no doubt would be watching the situation once again.
Brookfield was an interested buyer in InfraBuild but now it is wrestling with its own challenges over Healthscope.
Bain Capital and Blackstone could take a look, while BlueScope would be interested in InfraBuild’s mini mills and Vulcan Steel its distribution assets.
InfraBuild is seen to be teetering on the edge following the collapse of its sister company that owns the Whyalla Steelworks, also owned by GFG Alliance.
Posco Steel and Japanese steel groups have weighed a purchase of the business before, following the collapse of former owner Arrium.
InfraBuild is said to remain highly profitable but its undoing will be its debt and money owed by Whyalla. The risk is that Whyalla’s collapse puts InfraBuild immediately in default with its loans unless it can come up with a refinancing plan in 31 days.
InfraBuild’s steel distribution business is Australia’s largest processor and distributor of long steel products through its electric arc furnaces and produces 1.4 million tonnes of recycled steel across the country.
It operates at more than 140 locations nationally, including 26 domestic recycling centres and 113 retail and distribution sites.
The company is part of the global steel operations of Mr Gupta’s company GFG Alliance, which previously owed $US5bn to lender Greensill.
In 2023, InfraBuild was generating about $6bn of annual revenue and $239.6m in net profit.
The company’s debt level was believed to be around $2bn in 2022.
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