Sanjeev Gupta’s InfraBuild secures $US350m facility to underpin US expansion

Debt markets are opening back up for Sanjeev Gupta’s global empire, with Australian steelmaker InfraBuild securing $US350m in new loans.

Sanjeev Gupta’s InfraBuild has secured a lending facility to allow it to acquire a US foothold. Picture: Bloomberg

Sanjeev Gupta’s InfraBuild has put its US expansion plans back on track, closing a $US350m refinancing that puts the company a step closer to acquiring assets from another section of the mining magnate’s sprawling global empire.

InfraBuild remains the jewel in the crown of Mr Gupta’s global metals and mining empire, and the company said on Sunday it had closed an asset-backed loan from funds associated with Blackrock and Silver Point Finance.

The $US350m loan is the culmination of a six month-long search for financiers prepared to back the company’s $US600m acquisition of a group of steelworks in the US owned by Mr Gupta’s GFG alliance.

InfraBuild announced the acquisition in November, saying it planned to buy three companies from GFG, controlled by Liberty Steel US – which owns an electric arc furnace in Illinois, as well as manufacturing plants in Pennsylvania and Ohio, and the Georgetown steelworks in South Carolina.

The original deal was contingent on InfraBuild finding a $US350m lending facility, with another $US300m in deferred funding also due to be paid to GFG over several years after the close of the acquisition.

InfraBuild hit the road in earnest in March for the debt funding, with the new facility arranged by bankers from Jefferies.

Closing the new lending facility suggests the debt markets have again opened to InfraBuild after Mr Gupta’s empire was rocked by the collapse of its primary financier, Greensill Capital, in 2021.

InfraBuild has been solidly profitable since Greensill’s collapse, booking a $283.9m net profit last financial year, on adjusted earnings before interest, tax, depreciation and amortisation of $666m. In November the company said it had booked first-quarter EBITDA of $197m.

The company said on Sunday it had “maintained its strong financial performance through the first three quarters of its 2023 fiscal year”.

But concerns around the viability of the broader GFG group have limited InfraBuild’s ability to tap debt markets, with the company repaying a $250m asset-based lending facility last year after failing to roll over the debt.

InfraBuild also has $US325m in senior secure notes due to mature in October 2024, and ratings agency Fitch in March said the company’s ability to arrange financing for the US acquisition would be a key signal about its continued ability to access debt markets and refinance the outstanding debt facility.

The company has also been searching for a new chief executive since the departure of former Cleanaway boss Vik Bansal, who ran InfraBuild for only 15 months before jumping ship to helm Kerry Stokes-backed Boral.

Interim InfraBuild chief executive Dak Patel said the debt facility would help the company grow its business outside of its core Australian operations.

“The business has continued to perform strongly throughout this financial year and the asset-backed term loan provides us with capital to focus on strategic initiatives to strengthen operations and capitalise on the growing demand for lower carbon sustainable steel as we continue the momentum we’ve built in recent years,” he said.

That momentum is likely to continue later this year given the company’s chief Australian rival, BlueScope Steel, has flagged stronger than expected pricing in the Australian steel market.

BlueScope upgraded its earnings outlook in April on the back of a strong performance from its own US operations, where the company has just finished a $1bn expansion project.

But the company also said its Australian operations were performing better than it had previously projected, with steel pricing staying strong despite previous expectations that local buyers could reduce orders in the face of tougher economic conditions.