Gupta makes $500m Whyalla creditor claim for GFG Alliance

Sanjeev Gupta’s claim his company is owed $500m has landed just as the corporate regulator revealed its own probe into the tycoon’s GFG Alliance.

Sanjeev and Nicola Gupta visited the Tahmoor coal mine in NSW on February 25.

Sanjeev Gupta’s GFG Alliance claims he is owed $500m from the failed Whyalla steelworks in South Australia, with the former steel tycoon’s parent company emerging as the largest creditor after the state government put the plant into administration.

The claim landed as the corporate regulator revealed it was probing financial disclosure issues surrounding Whyalla and GFG.

Mr Gupta described the South Australian government’s move as an “unprecedented action” and said recent events at Whyalla “were unexpected and disappointing for us all”.

Ahead of the first Whyalla creditors’ meeting on Monday, GFG revealed its substantial exposure to the steelworks and said it was working closely with administrators KordaMentha.

“This process will take time, involving complexities, but our focus must remain on supporting Whyalla while safeguarding our interests, particularly as we are the largest creditor with around $500m owed to the group, testament to the support we’ve provided Whyalla,” Mr Gupta said in a memo sent to GFG’s 6000 staff on Thursday.

The Australian Securities & Investments Commission dep­uty chair Sarah Court said the regulator was closely following the situation at Whyalla.

She said ASIC was looking at the financial reporting and disclosures from the business, and would “continue to consider the governance issues going forward”.

Ms Court said ASIC was considering the broad spread of companies in Mr Gupta’s empire, here and overseas.

But she could not reveal whether ASIC was working with overseas regulators.

Mr Gupta, the GFG executive chairman, had been attempting to finalise an emergency $150m debt package for the last few months before the SA government intervention. While that has yet to materialise, GFG hopes to secure new funding in the “upcoming month”, according to the memo.

“The upcoming month may present challenges as we stabilise our operations, secure new funding, and navigate the administration process for Whyalla. Concurrently, we are diligently finalising the legal documentation for the Greensill settlement,” he added, a reference to its bid to settle debts with the collapsed financier.

Estimates suggest GFG owes $350m from Whyalla. GFG points to a series of setbacks, including blast furnace outages.

“The recent events at Whyalla were unexpected and disappointing for us all. Our efforts to restart the blast furnace and recapitalise the business were progressing well. Particularly as we were also navigating the worst steel crisis in over a decade with producers globally facing enormous losses,” Mr Gupta said.

The British executive also appeared to pull back on a plan to sell GFG’s Tahmoor coal mine in NSW, a move proposed several weeks ago to help pay creditors in Whyalla.

Removing GFG’s Whyalla operational cost exposure may mean it will now keep Tahmoor within the company fold.

“I explained how the administration at Whyalla opens up new opportunities for Tahmoor,” Mr Gupta said in the memo.

“The colliery has been a strong cash generator, but it has also provided considerable financial aid to Whyalla, which is no longer necessary. We remain interested in options, including joint venture partnerships that can add value, but our top priority is running the operation and reinvesting in the business.”

Both Mr Gupta and his wife, Nicola, visited the mine on Tuesday after workers were stood down on February 9 for four weeks on full pay amid financing concerns.

The Australian’s DataRoom column reported on Wednesday that most coal miners were sidestepping the mine sale, with offers closer to $US300m ($500m) than Mr Gupta’s $800m asking price.

The NSW government has also been watching the process closely, amid concern for the future for 450 workers.

“The NSW government is continuing to monitor the situation closely,” NSW Natural Resources Minister Courtney Houssos says. “Whether under the ownership of Mr Gupta or someone else, the NSW government is keen to see workers restart the mine’s operations.”

Mr Gupta also revealed problems at its TEMCO manganese smelter at Bell Bay in Tasmania, bought from mining major South32 for a “nominal” sum in late 2020.

“We have safely resumed operation of the Sinter plant and three furnaces after a disruption caused by a delay in ore supply. This delay was due to industrial action and weather conditions overseas. We are now working hard to process the shipment to meet customer demand,” Mr Gupta noted.

“Supply chain delays and squeezed margins is challenging our operations but a positive shift under the Trump administration has lifted sentiment on US steel prices and is expected to flow through to alloy pricing, benefiting LIBERTY Bell Bay.”