Nearly done, or done and dusted? Gupta’s White Oak deal includes Aussie asset security

British tycoon Sanjeev Gupta has done a deal to end UK litigation involving Tasmania’s Bell Bay manganese smelter. Picture: The Australian

Signs of hope, or another nail in the coffin? That’s the question hovering over Sanjeev Gupta’s latest efforts to save his global metals empire, after the British businessman handed security over his shares in a Tasmanian manganese smelter to US vulture fund White Oak.

White Oak is among the many lenders trying to wring cash out of Gupta’s GFG Alliance. In this case it’s $US190m, dating back to the 2021 collapse of Greensill Capital.

In February White Oak dropped an attempt in the UK to wind up key Gupta vehicle Liberty Commodities over the debt, telling a British court they had reached a commercial agreement with Gupta’s GFG.

A few days later another Gupta company, Liberty Onesteel (Primary) UK (LOPUK), filed documents showing it had granted White Oak security over its entire shareholding in Gupta’s Bell Bay manganese smelter in Tasmania, bought from South32 in early 2021.

Perhaps not coincidentally, LOPUK is the parent company of Liberty Primary Metals Australia (LPMA), owner of the Whyalla steel smelter now being run by administrators KordaMentha after the South Australian government stepped in last month.

Why does this matter? Gupta has traditionally avoided pledging assets across the various outposts of his empire in Europe, the US and Australia. If one domino falls, the others still stand — as is the case at Whyalla.

Workers at GFG Alliance’s Tahmoor mine were told a debt deal would soon be struck. Picture: Tait Schmaal

To pledge Bell Bay — only newly a part of the GFG group after Greensill went belly up and triggered Gupta’s debt crisis — smacks of last-day desperation.

Or instead it’s actually a sign of the long-promised debt deal which will sweep away all of GFG’s problems.

That’s been Gupta’s line for almost four years now, and GFG is sticking to it. Asked about the Bell Bay security, a spokesman again said a debt deal was near.

“We are in the process of reaching a comprehensive global settlement with all creditors including White Oak. The settlement resolves all disputes and paves the way for financing solutions including for Liberty Bell Bay,” he said.

But that would be extraordinary, given mounting problems elsewhere.

Lenders to Gupta’s Infrabuild steel group met with management in Australia this week, and multiple sources say the talks failed to improve their confidence in its future.

And potential buyers of Gupta’s Tahmoor coal mine in NSW have walked away, figuring they can probably get it cheaper if the operation goes bust and lapses into administration.

GFG is now believed to be chasing between $80m to $150m in debt to recapitalise the mine — amid a dearth of lenders prepared to deal with Gupta on any terms.

The bulk of Tahmoor’s workforce were stood down on full pay in early February after unpaid suppliers stopped making deliveries to the mine.

The good news for them is GFG made this week’s pay run. The bad news is there’s no guarantee it will continue.

Tahmoor is still washing and selling stockpiled ore, so some cash is still flowing into the business. But, sources on the ground say those stockpiles won’t last more than another week or so. After that, the cash dries up.

But, the optimism still flows from GFG HQ. Tahmoor workers were told this week Gupta expects to sign off on a debt deal by the end of March (have we heard this before somewhere?).

Yet mine management are only publishing staff rosters to the middle of next week.

Make of that what you will…