Gupta fires back at private equity firm as InfraBuild sued

Under-siege industrialist Sanjeev Gupta’s InfraBuild has attacked in court private equity firm FitzWalter over its ­demand for an immediate $800m repayment from GFG Alliance.

British tycoon Sanjeev Gupta. Picture: Bloomberg

Sanjeev Gupta’s InfraBuild has attacked the Ben Brazil-led private equity firm FitzWalter over its ­demand for an immediate $800m repayment from GFG Alliance, describing its lawsuit as “spurious” and calling for the case to be ­dismissed.

FitzWalter purchased bonds in InfraBuild Australia, owned by Mr Gupta and the country’s largest processor and distributor of long-steel products, but took legal action claiming there had been a fundamental change of control in the company.

The investment firm argued that control had passed from Mr Gupta to creditors owed money from GFG after the collapse of Greensill, a major lender to the former tycoon.

InfraBuild said FitzWalter’s case was “literally backwards”, noting the private equity firm bought their interest in the bonds more than a year after the November 2023 indenture and just two months before bringing the lawsuit.

“The gravamen of their claims is that a series of fully disclosed events that occurred over two years before the notes were issued somehow constitutes a “Change of Control” under the indenture, triggering InfraBuild’s obligation to offer to repurchase plaintiffs’ notes,” InfraBuild documents filed with the court said. “As a matter of both logic and bedrock contract law, plaintiffs’ made for litigation claims are spurious and must be dismissed.”

InfraBuild said both the offering memorandum for the bondholder notes and the indenture “clearly and extensively disclosed the disputed default” on the Greensill agreements and the anticipated settlement of that dispute.

“Indeed, the indenture expressly contemplates and permits the use of InfraBuild’s funds to pay for that settlement.”

It noted FitzWalter’s claims were barred by the indenture’s limitation on suits clause, which prohibits seeking “any remedy with respect to this indenture or the notes” without first meeting certain specified contractual requirements.

It also alleged New York courts had long held that a plaintiff waives a breach when it enters into a contract with notice disclosed by the allegedly breaching party of facts constituting the alleged breach.

Bitish tycoon Sanjeev Gupta. Picture: DENIS CHARLET / AFP)

The spat comes as The Australian’s DataRoom column reported US private equity firm Apollo Global Management is believed to be keeping an open file on Mr Gupta’s InfraBuild should it become available for sale at a discount price.

Whyalla’s collapse triggers technical debt defaults within InfraBuild, sources say, and there’s questions as to how much cash could get sucked out of the company from parent guarantees for other parts of the business.

It emerged this week that 10-12 “credible parties” were interested in potentially making a bid to buy the Whyalla steelworks, with Australia’s largest steelmaker, BlueScope, among the pack.

KordaMentha partner Sebastian Hams, addressing the Whyalla One forum of workers and creditors in Whyalla on Wednesday morning, told the group the firm, which is the administrator of the steelworks, aims to have it sold this calendar year. Mr Hams, speaking to The Australian after the meeting, said KordaMentha was in the process of assessing the OneSteel Manufacturing business, which includes mining and steelmaking divisions, before work on a proposal to be put to potential buyers would be produced.

BlueScope was brought in by KordaMentha to give advice on the operation of the blast furnace, which went cold twice last year and was not yet back p to full capacity when they were appointed. Mr Hams said the blast furnace was now operating as expected.

KordaMentha, in an affidavit lodged with the Federal Court earlier this month, had complained that they “are yet to receive unfettered access” to the books and records of OneSteel, which were held by GFG Alliance. Mr Hams said this had since been rectified.

The SA government pushed OneSteel Manufacturing into administration in mid February, with documents later revealing the government’s Department for Energy and Mining was owed $34.1m by the company and water utility SA Water another $15.02m.

OneSteel Manufacturing’s debts were assessed by KordaMentha at $1.34bn, with other companies in Mr Gupta’s GFG group, including long steel products maker InfraBuild, claiming to be owed $536m. The affidavit lodged by KordaMentha says the firm will be examining the “lawfulness” of some of the transactions behind those claimed debts.

Meanwhile, The Australian reported this week GFG Alliance purchased electricity and gas for its Whyalla steelworks on the volatile spot market rather than opt for the safety net of contracts, underscoring the plant’s operational strains before collapsing into administration.

GFG’s energy procurement strategy meant it was subject to the sometimes wild swings of spot market pricing for both its electricity and gas needs, sources said, while also being forced to pre-pay for diesel supplies. Large commercial customers are usually required to provide a bank guaran­tee, cash or form of credit to qualify for contracts offered by brokers or utilities offering large loads of power or gas.