InfraBuild ready to speak with its creditors

InfraBuild’s collapse is considered inevitable due to the debt of the broader company. Picture: Alan Barber

InfraBuild is believed to be holding a meeting for creditors this week amid talk that some non-core steel assets could be sold, while others say sales and lease-backs are being explored.

It comes as financier Gordon Brothers continues talks with Sanjeev Gupta’s steel business, InfraBuild, about hundreds of millions of dollars in asset-backed loans, say sources.

Bond holders in 2023 were said to be owed $US350m. In addition, there are loans worth about $200m.

Mr Gupta has been searching for a senior executive for his steel empire, and sources believe candidates with restructuring expertise are being targeted.

The understanding is that the executive would work across his broader GFG Alliance portfolio.

Last month the South Australian government called in administrator KordaMentha at Mr Gupta’s Whyalla steelworks.

DataRoom has reported that suitors were starting to circle Mr Gupta’s InfraBuild business, the jewel in the crown, as expectations build that an eventual collapse is inevitable because of the large debts across his empire.

A collapse of the Whyalla business is understood to trigger a technical default on InfraBuild debt, say sources.

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

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

It is owed $156m by the Whyalla steelworks, while 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 and produces 1.4 million tonnes of recycled steel across the country. It operates at more than 140 locations, including 26 recycling centres and 113 retail and distribution sites.