GFG reaches financing agreement to stabilise global operations
Sanjeev Gupta’s global steelmaking business GFG has reached a commercial agreement with Greensill Capital, and has signalled it will soon pump funds into its beleaguered Whyalla operations.
GFG has reached an agreement for settlement of all debts claimed by parties responsible for the main creditors of collapsed financier Greensill Capital, the company announced this morning.
It means the firm can start pumping funds into its operations around the world, including at Whyalla in South Australia.
GFG said the agreement remained subject to a final binding legal agreement and marked “the final chapter of GFG’s debt settlement which has been under negotiation since the collapse of Greensill Capital in March 2021”.
Greensill – founded by Australian Lex Greensill – was a financier of GFG’s global operations. The financier’s collapse in 2021 came after it found itself unable to repay a $140 million loan to Credit Suisse and was hit by defaults from GFG.
Greensill has since been in ongoing legal battles, but this breakthrough announcement means GFG can “develop longer term sustainable financing for its core operations in Australia, US, UK, Romania and Italy”.
“In the UK, the development paves the way for successful completion of the announced Restructuring plan for LIBERTY Specialty Steel UK. It also clears the way to secure fresh capital into the UK businesses poised for leading the industry on decarbonisation,” GFG said.
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“In Australia, the development means that GFG’s successful InfraBuild business can finalise its FY 2024 accounts, and supports new capital for LIBERTY Primary Metals Australia, including the Whyalla steelworks.”
Earlier this week, ratings agency Moody’s said InfraBuild’s US$550 million debt default could be triggered if the company failed to file its already-delayed financial accounts. Moody’s also downgraded InfraBuild’s credit rating.
In its statement, GFG said it launched an expedited process to sell part or all of its equity in the Tahmoor Coking Coal mine in New South Wales, with “some of the proceeds being available for reinvestment in Whyalla to catch up with supplier payments and boost liquidity, subject to board approval”.
GFG Alliance executive chairman Sanjeev Gupta said: “Today’s agreement with the Greensill creditors is a great relief for GFG and all our loyal workforce and suppliers”.
“It will enable us to push on from the deep challenges caused by Greensill’s collapse in 2021 and now gives us a financial platform for recovery and growth,” he said.
“With signs of improvements at our operations and some upturn in our markets, we are confident of being able to access longer-term financing to build on the significant investments we have already made in our international businesses, and to rebuild stakeholder confidence.”
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Today, Premier Peter Malinauskas said he’d convened a meeting of the state’s Steel Taskforce.
“We’ll be dissecting this in a fair bit of detail, particularly with getting some of the legal and financial advice to understand the implications of it,” he said.
“This statement in and of itself doesn’t mean people owed money on the ground in Whyalla wake up tomorrow and their bank account is paid, that is not going to happen in reality, as welcome as it would be from our perspective.
“Like I said… I am deliberately cautious about this because, over the months and years, across governments of all political persuasions, we’ve seen statement after statement be released from GFG and sometimes they’re true, which is great, and sometimes they don’t necessarily come to fruition. So, we approach this with caution, notwithstanding the fact it is welcome.”
The news comes after weeks of pressure on the operator of the Whyalla Steelworks from both the local media and the state government.
Revelations that the steelworks owes tens of millions of dollars to the government and businesses were publicised, while the Premier flew to Whyalla to “gather intelligence” from creditors.
State cabinet’s Upper Spencer Gulf subcommittee met in Whyalla on Tuesday and Malinauskas said it was an important opportunity to speak to creditors, the mayor and council team, unions and the chamber of commerce.
Under questioning in a state parliament committee hearing, SA Treasury chief executive Tammie Pribanic revealed GFG owes SA Water about $15 million in unpaid water bills.
Opposition Leader Vincent Tarzia said it was “absolutely outrageous that SA should be paying for $15 million in unpaid water bills of a billionaire” and he called on the premier to guarantee the bill would not be footed by taxpayers.
Also revealed today by The Advertiser was a list of 1293 GFG creditors cumulatively owed more than $300 million.
