Sanjeev Gupta’s $540m global rescue plan revealed in InfraBuild accounts

Sanjeev Gupta planned to pull $US350m from InfraBuild to cover problems in the rest of his global business empire, new documents show. Picture: Mark Brake

Sanjeev Gupta planned to rip $540m out of his flagship Australian steel business to pay off debts elsewhere in his ailing global metals group, new documents reveal.

The plan was stopped when bondholders of Gupta’s Liberty InfraBuild steel business in Australia stepped in and threatened to put the company under unless the British metals magnate agreed to a refinancing deal that prevented money from flowing elsewhere into the GFG Alliance group.

In a sign that Gupta’s creditors have finally learned some lessons from the British businessman’s financial machinationselsewhere in the world, InfraBuild is also forbidden from handing over any dividends to Gupta’s businesses until its debts are paid off, has restrictions on making payments for services to other parts to the GFG group.

InfraBuild lenders also put a limit on how much InfraBuild can kick in towards legal and advisory fees needed to settle Gupta’s broader debt problems.

The details of the InfraBuild plans are buried in the company’s long-overdue financial accounts for 2024, released late on Friday. They reveal a plan to strip the company of $US350m – the same figure InfraBuild raised from lenders through a bond issue in late 2023 – in order to settle GFG debts associated with the collapse of Greensill Capital in 2021.

Greensill registered a charge over InfraBuild’s Australian parent company, Liberty Holdings Australia, in March 2021, claiming the money was owed through Gupta’s complex dealings with Lex Greensill and his supply chain financing business.

While disputed by Gupta’s companies, the charge still sits over Liberty Holding’s ownership of shares in InfraBuild, long the only genuinely profitable part of Gupta’s international businesses.

Since then GFG has been negotiating with its creditors to pay off the legacy of its relationship with Greensill – including Greensill Bank, now in the hands of German regulators, and Credit Suisse, which packaged debts raised by Greensill and sold them on to investors claiming they were safe revenue streams.

Gupta has constantly claimed a debt deal was close, without ever quite landing an agreement to extinguish his debts and set lenders to rights.

InfraBuild’s latest accounts reveal that the Australian steel group was a key part of that financing deal, with the company set to kick in $US350m in cash as part of a broader settlement.

The money had been held in a restricted account, but was liberated by bond refinancing deals with its bondholders in late 2024 and last month.

“The directors previously planned a distribution of up to $US350m using funds that were previously held in escrow (restricted cash) from the consolidated group, subject to board approval (among other transactions to be effected by the GFG Alliance),” the accounts say.

The surge in government infrastructure spending and disrupted supply chains helped InfraBuild to record profits in the wake of the Covid pandemic, but a downturn in steel pricing has since put InfraBuild’s business under pressure.

A $240m profit in the 2023 financial year turned into a $121m loss in the 12 months to the end of June 2024, accounts show.

But the decision of bondholders to step in as part of negotiations around InfraBuild’s late accounts and market weakness included conditions that InfraBuild is no longer allowed to help out the rest of Gupta’s metals empire with its debt problems. So tight are the rules that InfraBuild is not only forbidden to contribute cash to any settlement between GFG and creditors elsewhere in the world, but dividends are also forbidden until InfraBuild’s lenders are paid off.

“The new terms also limit the amount of professional fees that the consolidated group can pay in relation to (GFG’s) settlement,” the accounts say.

Now, liberating InfraBuild won’t protect the company from the effects of an economic downturn – always a very real risk in a steel business.

And InfraBuild is also looking to flog off a group of US metals recycling businesses bought only a few years ago.

But – hand on heart – InfraBuild’s directors are now able to say that they believe the company can pay its debts and keep running as a going concern in the immediate future – and auditors KPMG have finally signed off on the accounts.

Amazing what you can achieve when you liberate a company from the mess caused by Gupta’s business dealings elsewhere in the world. And certainly a relief for InfraBuild employees, given the travails suffered by their colleagues elsewhere on Planet Gupta.