Sanjeev Gupta’s GFG Alliance to launch legal action against private equity fund AIP over Dunkirk smelter
Sanjeev Gupta’s GFG Alliance to launch legal action against private equity fund AIP over Dunkirk smelter.
Sanjeev Gupta’s GFG Alliance will launch legal action against any attempts by US private equity fund AIP to seize control of its Dunkirk smelter, Europe’s largest primary aluminium producer.
The Dunkirk smelter in France is part of GFG’s Alvance business.
AIP bought out a portion of the Alvance debts from its previous lenders earlier this year.
Early discussions between GFG and AIP “quickly ended” due to certain concerns over the negotiations, and the gross under-market valuation AIP put on the business, GFG said in a statement.
At the same time as ending negotiations with AIP in July, GFG announced a full commercial arrangement between Alvance and an unnamed metal market business.
As part of this agreement, the international partner agreed to repay AIP in full and provide additional support for the Alvance business, GFG says.
“Despite this development, and approaches by GFG to repay AIP the debt it held, AIP took further aggressive action to acquire Dunkirk’s mezzanine debt in the secondary debt market.”
“GFG believes this was all part of a premeditated plan to accelerate the debt payment with a view to immediately enforcing its debt to acquire the assets on the cheap through an aggressive loan-to-own practice common in so-called “vulture” funds.”
GFG said AIP is out to “artificially manufacture an enforcement of its debt and seize the assets to try to obtain them at a substantial discount to their market value”.
“Given GFG’s efforts to repay, repurchase or refinance the debt, AIP’s stated position that GFG is in default is incorrect.”
The group bought the Dunkirk aluminium smelter in 2018 and has invested more than $US100m ($A137m) in the business, protecting nearly 1,000 jobs and increasing earnings threefold.
GFG executive chairman Sanjeev Gupta said AIP’s behaviour was “cynical and predatory” to try to acquire the business “on the cheap”.
“We will fight this with all of our efforts to ensure Dunkirk remains inside our international steel and aluminium group and is able to execute our long-term strategy, to the benefit of all of its stakeholders.”