New bidder emerges in fight for Sanjeev Gupta’s prized Tahmoor coal mine

Multiple offers have been made for Sanjeev Gupta’s Tahmoor colliery. Picture: Tait Schmaal

Sanjeev Gupta’s merry-go-round at the Tahmoor colliery is spinning again, as another white knight rolls up looking to crowbar the shuttered mine from his grasp.

This time it’s long-suffering mining contractor RStar, which walked off the site in late October after Gupta’s GFG fell too far behind on the bills.

Margin Call hears GFG has managed to make some inroads into payments to the contractor since then, but the outstanding bill is still substantial.

RStar, along with GBA Capital, wrote to the administrator of Gupta’s Liberty Primary Metals Australia – William Buck’s Michael Brereton – late last week to express an interest in buying the mine, but asking for time to put a bid together.

The contractor confirmed the move to Margin Call on Monday, saying GBA’s John Ciganek was putting together a broader consortium to back its offer. Both GBA and RStar are touring the mine on Tuesday as part of due-diligence efforts.

Brereton delayed the release of the creditor’s report for Gupta’s Liberty Primary Metals Australia (LPMA) on Friday, after the fresh bid was lobbed for the colliery.

RStar’s offer adds a bit of competitive tension to Brereton’s thinking. He’s already weighing the merits of a prepackaged rescue offer from Gupta’s Liberty OneSteel (Primary) UK and Clydesdale Engineering.

A third buyer, 3DSi – led by former Mastermyne boss Tony Caruso – has also made an offer for Tahmoor and is a fair bit more advanced in pulling together the money than RStar, from what we hear.

RStar’s advantage is that its workforce has been running the mine for years. And, while it’s still looking for bigger partners to bankroll the bid, Margin Call is told the offer will cut in Tahmoor’s workers and management for an equity stake – that’s the mine management, RStar was at pains to point out when Margin Call picked up the phone, not GFG or Gupta’s people.

Both of the external bids are believed to be in the $300m to $400m range – though a lot of that will go to paying off creditors of the mine.

It’s only a matter of time before Tahmoor joins the long list of Gupta companies in administration.

Margin Call hears that the debt pile even includes a long-overdue payment to the local Subway, stiffed on the bill for delivering food to a meeting.

How much Gutpa and GFG walk away with is largely down to them.

Outside of Gupta’s Infrabuild steel business, sensibly ringfenced by its own lenders, Tahmoor is about the last thing of any real value in the British businessman’s former global empire.

Pretty much everything else is either mothballed, in administration, or hocked to lenders to try to prevent the fall of any more dominoes. Or all three.

In theory Tahmoor has also been separated from the rest of Gupta’s debt machine.

But it’s never easy to tell when Gupta is involved, and the major problem for Brereton – as William Buck explained to LPMA creditors at a recent meeting – is that it’s not entirely clear exactly who owes what to whom inside the Gupta empire.

“Due to the co-mingled nature of the entity’s financial position as a holding company, we have been unable to gain direct access to the internal accounting system,” William Buck’s Rashnyl Prasad told a creditor’s meeting.

Which means they also, from the look of it, have no idea whether creditors chasing LPMA for money – like NRW Holdings, owed $130m – might also have some sort of claim on Tahmoor.

What is clear is that nobody – except the increasingly desperate man himself – wants Gupta to hang on to the coal mine. Gupta’s only chance rests on a $US95m ($145m) deal with lenders – but that requires a long list of conditions to be met, and nobody seems to be budging.

GFG is still meeting the payroll of its part of the workforce, last time we checked. But it’s only a matter of time before Tahmoor joins the long list of Gupta companies in administration – particularly given Tahmoor’s insurer is running a winding up action in the NSW Supreme Court.

That’s something all of the potential bidders are trying to avoid, as tipping the mine into administration would also force it into full care-and-maintenance – making it far more expensive to restart. Industry sources suggest the cost would go from around $20m currently, to upwards of $100m if Tahmoor is fully shut down.