Metal trader Sanjeev Gupta has agreed to a major financial restructuring of his Australian steelworks and will inject 50 50 million for new funding at his UK plant, ending the uncertainty of thousands of workers.
The deals will provide a much-needed breathing space for Gupta, who has been scrambling to find new funding for his global metal and energy empire, the GFG Alliance, since its main donor, Greensil Capital, collapsed in March. Negotiations with White Oak Global Advisors, a US debt investor and an existing iterator, have stalled in recent months.
In particular, the promise of cash injections will come as a relief to the workers of the Gupta Liberty Steel Plant in the United Kingdom. Plants at the two main plants at Rotherham and Stokesbridge in Yorkshire were too low for working capital and production, all shutting down in recent weeks. This money will secure about 650 jobs directly in Rotherham.
Roy Rickhus, general secretary of the UK Steelworkers Union community, said the news was “too late, but it was an important step in the right direction and showed that GFG could raise funds for the UK”.
Under the terms of the restructuring over the weekend, GFG will pay in advance to its existing debtors, Credit Suisse Asset Management and Greensil Bank for its steelwork and mining related money in Australia. The balance of the outstanding debt will be paid in installments over the next two years.
Jeffrey Stein, chief restructuring officer at Liberty Steel, said debt restructuring in Australia “provides business clarity and stability and secures a clear recovery plan for donors”.
“We have agreed on a restructuring plan. . . We were adamant that we needed cash before we signed anything and promised a cast iron that the rest of the money would be paid with interest. He is committed to giving back a lot of money, ”said one person referring to the Credit Suisse talks.
GFG owes more than ৫ 5 billion, most of Greensil. The metal group owes সু 1.3 billion to Credit Suisse alone, of which 350 35050 million is related to its Australian assets and the bulk, 9 950 million, is related to UK activities. According to two people close to the talks, GFG has now agreed to return one-third of the 35050 million.
The Australian restructuring will pave the way for GFG to inject 50 50 million in cash into Liberty Steel UK, which will allow it to resume production at Rutherham, the company said. GFG is expected to still find a buyer for its Stocksbridge operation that produces material for Airspace customers but the cash injection will allow it to run a “focused production campaign”.
The initial funds, described by GFG as “Shareholder Funds”, will be allocated to the business through Liberty Capital, a new separate entity.
Gupta, who celebrated his 50th birthday with a stylish party on the Greek island of Mykonos earlier this month, said the fund would “give time to prove that operations can run effectively that will enable us to finalize our long debt restructuring”.
Despite progress in Australia and the UK, Gupta still faces numerous challenges to stabilize his group, not least in the investigation of Britain’s Serious Fraud Office.
In France, GFG American Industrial Partners, a U.S. investment group, is engaged in a fierce battle over control of Europe’s largest aluminum smelter, widely seen as the crown jewel of its European business.
On Sunday, Stein promised more progress. “The next step in our global refueling will be in Europe, where a significant number of new donors are interested in rescheduling our steel resources,” he said.