Sanjeev Gupta closer to deal to save Whyalla steelworks
Sanjeev Gupta says Dubai debt refinancing talks are moving closer to securing the future of South Australia’s Whyalla steelworks.
Sanjeev Gupta has crept closer to securing the future of South Australia’s Whyalla steelworks after holding “very constructive and productive” meetings in Dubai to refinance debt held with banking giant Credit Suisse.
Mr Gupta’s Liberty Steel said the company was in advanced talks with Credit Suisse “to reach a formal standstill agreement on its Liberty Primary Metals Australia business while refinancing is completed that will repay Credit Suisse out in full”.
“Both parties also made significant progress in agreeing a framework to resolve GFG Alliance’s remaining exposure with Credit Suisse,” Liberty said in a statement on Tuesday morning.
The UK-based conglomerate had been under pressure to refinance $US5 billion ($6.5 billion) in debt globally to failed supply chain financing company Greensill, which was then bundled into bonds sold on to clients of Credit Suisse. Greensill’s collapse in March coincided with moves by the global banker to wind up those supply chain financing funds, triggering a brawl with GFG over how much of that Greensill-originated debt was owed to Credit Suisse and its clients in the supply chain funds.
Credit Suisse has since filed winding-up orders against the Whyalla steelworks and other parts of the Liberty Primary Metals business in its quest to recover money it says is owed through Mr Gupta’s complex relationship with Greensill.
GFG has said it has struck a deal with White Oak Global Advisors for the $430 million owed by Liberty Primary Metals Australia, despite some uncertainty over the deal after the UK’s Serious Fraud Office probed the steel magnate’s empire. The standstill agreement – if finalised – will probably give the company, and its employees, some breathing space from the threat of court-ordered liquidation.
Mr Gupta also announced plans on Tuesday to offload three British steel plants, further evidence the ambitious industrialist overreached with a whirlwind string of deals over recent years.
GFG adviser Alvarez & Marsal will run the UK sales processes.
Despite initial resistance to any break-up of his sprawling global industrial empire, Mr Gupta has also said he is considering selling off GFG’s Cultana solar farm and Playford battery projects in South Australia, hiring Ernst & Young to explore partnership or sale options for the assets, held in his SIMEC Energy division and slated to provide renewable energy to fuel the British industrialist’s dream of producing carbon-free “green” steel.
The latest move is another step in the broader restructure of Mr Gupta’s global corporate empire, after Liberty appointed four specialist directors to Liberty’s boards – new chief financial officer Deepak Sogani, corporate restructuring and turnaround specialist Jeffrey Stein, the former boss of his Wyelands Bank Iain Hunter, and metals trader Jeff Kabel – on May 6 to help restructure the group.
Earlier this month Mr Gupta effectively abandoned plans to float his Australian InfraBuild business, with the British industrialist shifting the structure of steel-trading and manufacturing business (his most valuable asset), making it easier to sell as a going concern, or take a cash injection from private equity instead.
After making Liberty Holdings Australia – the parent company of his InfraBuild assets, as well as some US steel assets – a public company in 2019, a necessary precursor to a public float, Mr Gupta switched back its status in May, returning its structure to that of a proprietary limited company.
The shift effectively rules out a public share offer such as a float of the group on the Australian Securities Exchange, but would make it easier to introduce a major new shareholder – such as a private equity firm – to its register, or sell all or part of the business.
Mr Gupta made his name in Australia rescuing Whyalla from administration as part of a rapid-fire $20 billion global acquisition spree, buying struggling steel and aluminium assets from industrial giants including Eiro Tinto, Tata and ArcelorMittal.
GFG employs about 35,000 people globally and more than 7000 people in Australia.
The company bought the Whyalla assets, formerly owned by listed company Arrium, out of administration in 2017 and Mr Gupta soon set about announcing a series of investment plans for the steel mill as well as sweeping renewable energy plans, most of which are yet to be realised.
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