Creditors approve deal putting Sanjeev Gupta back in charge of Tahmoor mine

Sanjeev Gupta has somehow managed to pull off another deal to protect control of his NSW coal mine. Picture: AFP

Another duck, another weave, another slip and Sanjeev Gupta is back in control of his best remaining mining asset, at least for the moment.

On Monday, creditors of Gupta’s Liberty Primary Metals Australia (LPMA) approved a refinancing proposal from Gupta’s Clydesdale Engineering – best known for making brake pedals.

That puts Clydesdale, along with Gupta’s Liberty OneSteel (Primary) UK Ltd (best known as one of his many, many holding companies scattered about the planet) in the frame as the future owners of the mothballed Tahmoor colliery in New South Wales.

In return, Gupta has to find $1m in hard cash by March 2026 – which will be used to pay administrators William Buck, LPMA auditors KPMG, and $20,000 of contractor NRW’s legal expenses for bringing a winding up action against the company over a $130m debt.

Everything else is on a promise, surprisingly enough.

Another $40m will be paid into a trust from the sale of Gupta’s mothballed South Korean electric arc furnace (that’s the one he bought to ship out to Romania, readers may recall).

If it happens, and if they get that much. That money will go to NRW’s Golding Contractors and lender Oaktree, which has about $15.7m in secured debt sitting over LPMA and its subsidiaries.

And into a third fund goes anything left over if – and only if – Gupta sells Tahmoor at some point in the future. That would go to NRW, Oaktree, the administrators of the Whyalla steelworks and other sundry creditors.

What does all this mean?

The deal, known as a deed of company arrangement (DOCA), puts Gupta firmly back in control of the sale of Tahmoor. At least two bids have been made for the mine in recent weeks – contractor RStar, and a second proposal from 3DSi, led by former Mastermyne boss Tony Caruso.

They’ll now have to go back to dealing with Gupta and his inner circle. Which has been fielding offers for the coal mine for the better part of a year, since it was shuttered because unpaid suppliers stopped making deliveries.

Tahmoor won’t make any money until Gupta gets it going again – which he can’t until Oaktree lends him yet more money. Which won’t happen, as things stand, until the NSW government lifts its security over the coal mine’s tenements. Which it is saying it won’t do.

Meanwhile, Tahmoor’s workers are sitting around – still getting paid by Gupta’s GFG, to be fair – waiting for an outcome that will let them get back to work.

It is, by any standards, an utterly bizarre decision. Gupta has, yet again, managed to slip the noose and retain control of a key asset by making a set of promises of future payment.

And, we’re guessing, because the overwhelming majority of LPMA creditors are Gupta entities.

Of the $830m LPMA owed, according to documents filed by William Buck to ASIC, about $460m was registered by companies associated with the British businessman. And another $199m was owed to Gupta’s lenders – primarily Oaktree.

How does everyone else fare under the DOCA? Not well.

Before any sale of Tahmoor, NRW would get paid about 27.5c in the dollar for the $130m it is owed (assuming the South Korean steel mill sells), according to estimates published by William Buck’s Michael Brereton. Unless Tahmoor is sold within 18 months, and returns a surplus after paying off its own debts, NRW will still be owed about $89.8m.

That’s a pretty poor return for propping up Gupta’s South Australian iron ore mines for the last few years, you have to say.

Other creditors with a claim – such as Aurizon, which is owed $22m? Good luck. They don’t get paid unless Tahmoor fetches a very handsome price.

The next best alternative is that Tahmoor is put into liquidation, and its creditors – owed more than $100m in their own right – get paid out by the buyer.