Investment bank Jefferies is understood to have launched a process to refinance InfraBuild after owner Sanjeev Gupta recently struck a deal with Credit Suisse.
InfraBuild is highly profitable at the moment, capitalising on the rising price of steel.
Gupta hopes to refinance InfraBuild’s high-yield bond, worth about $US450m. It also had a debtor facility worth about $US250m that has been repaid.
Bain Capital had been in prolonged talks about a refinancing deal, but has now walked away.
The understanding is that InfraBuild is seeking up to $US550m of loans so Gupta can use the funds to settle debts elsewhere.
Sources say the logical outcome is that Jefferies will sell down the loans to other financiers.
The Australian reported last week that InfraBuild was raising finance to buy three US businesses from parent company GFG Alliance: Keystone Consolidated Industries, which operates in Illinois, Ohio and New Mexico; Johnstown Wire Technologies (Pennsylvania and Ohio); and the Georgetown steelworks in South Carolina.
InfraBuild generated net revenues of $1.529bn in the first quarter of the financial year, up 2 per cent, with earnings before interest, tax, depreciation and amortisation 24 per cent higher at $197m. The company’s most recent financial report lodged with the corporate regulator shows it made a net profit for the 2022 financial year of $283.9m, up from $115.2m, on revenues of $5.99bn.
Yet some believe that a slowdown is on its way for the group, which has been enjoying buoyant conditions that may have peaked.
InfraBuild makes and distributes steel “long products” at its Australian operations in Newcastle, Laverton, Geelong and other Australian sites. It has 26 scrap metal recycling centres across Australia and centres in Poland, the US and Hong Kong.
Gupta’s Liberty Steel has been struggling with a debt pile believed to be close to $US5bn globally.
Its main lender, Greensill, collapsed in 2021, and Credit Suisse, which was a major creditor to Greensill, started insolvency proceedings against GFG Alliance in Australia.
About $430m in debt is understood to have been associated with Liberty’s Australian assets, owned by Liberty Primary Metals Australia.
InfraBuild’s debt was believed to have been about $2bn Earlier this year.
The company had previously been slated for an initial public offering, but it appears to be off the agenda for some time, partly due to the volatile market conditions.
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