Restructuring advisers assessing options around GFG Alliance’s $950m debt pile
Grant Thornton has brought in restructuring advisers regarding the money Sanjeev Gupta’s GFG Alliance owes collapsed finance group Greensill — none of which has been repaid.
Grant Thornton has appointed a restructuring adviser to canvass its options around the $950m Sanjeev Gupta’s GFG Alliance owes to its former financier Greensill, none of which it has paid back since the lender spectacularly collapsed in 2021.
Documents lodged with Companies House in the UK show Grant Thornton, which is the administrator of the failed Greensill Group, formerly headed by Australian financial engineer Lex Greensill, is considering its options relating to the debt.
Grant Thornton said in its most recent report GFG, which is the parent company of Australian subsidiaries Infrabuild and Liberty Primary Metals Australia — which owns the Whyalla steelworks — has not paid any of the $US587.2m it owes the failed group, despite striking several non-binding agreements to pay back the debt.
“As we have reported previously, non-binding term sheets were signed with Sanjeev Gupta in November 2022, June 2023 and November 2023 … with a view to implementing a consensual settlement of the amounts owing,’' Grant Thornton said in the report.
“Following continued negotiations with Sanjeev Gupta and GFG, we signed a further revised non-binding term sheet in March 2024; the transaction as envisaged under the latest non-binding term sheet would encompass all amounts due to Greensill Capital UK (GCUK), and, if implemented, would result in a below par recovery to GCUK funded by both lump sum and bullet repayments.’’
Grant Thornton said legal work relating to the proposed settlement has been funded to date by a capped indemnity backed by GFG, “However the funding to cover legal costs of preparation of this consensual agreement has recently been exhausted, with no further funding having been provided by GFG to date of this report’’.
“To the extent that we are not able to agree and implement the restructuring and reflecting the extended period of time that has passed whilst negotiations have been ongoing, we continue to consider the recovery options that are available to GCUK, under the security and guarantees granted by GFG in connection with the GFG programs.
“In respect of our planning, we are working with an independent restructuring adviser.
“However we are not able to provide the details of such strategies so as not to prejudice our position’’.
Grant Thornton said debts were owed across 33 separate balance sheet items.
GFG Alliance’s defaults on debt repayments were a key reason for the 2021 failure of Greensill, with the financier extending billions in debt and supply chain financing to Mr Gupta’s global group of companies.
A GFG Alliance spokesperson told The Australian: “It is a complex restructuring taking place in a difficult market environment which has taken longer than expected. Productive negotiations continue and we expect to close out the Greensill debt restructure in 2024 which will open up many new possibilities for financing.”
GFG’s local operations, LPMA and Infrabuild, have been profitable in recent years, however Whyalla steelworks operator LPMA will post an as-yet unquantified loss for the most recent financial year, as revealed by Mr Gupta in September, with low steel prices and an extended shutdown of the blast furnace to blame.
The blast furnace came back online in June but was shut down again in September after “unwanted material’’ was introduced to it. It is yet to come back online.
LPMA laid off 50 white-collar staff in August followed by an estimated 100 jobs to go from the mining division over time as the company’s hematite iron ore operations are wound down.
Suppliers have also been complaining anonymously they are being paid late.
Mr Gupta said last month he remained committed to his vision to produce “green steel” at Whyalla by installing a new direct-reduced iron plant and an electric arc furnace.
How this project, which would run to at least half a billion dollars in capital expenditure, will be financed, remains to be seen.
The federal and South Australian government have committed — but not handed over — $63m and $50m in grant funding respectively, tied to milestones, which can be used to part-fund the project.
The project is forecasted to be operational in 2027, two years later than originally expected.
Mr Gupta has also come under fire for recently shelling out $12.5m to buy a waterfront apartment on Sydney Harbour, to add to his $34m Potts Point mansion Bomera, while his Australian business interests are struggling.
GFG has been contacted for comment.
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