Debt deal with Credit Suisse to help GFG Alliance renew India focus

Our Bureau Mumbai | Updated on October 13, 2021

Sanjeev Gupta   -  REUTERS

Sanjeev Gupta-backed company will make new investments soon

Sanjeev Gupta-backed GFG Alliance will renew its plans to make India the centre of its decarbonised industrial strategy with the refinancing of Greensill debts.

“GFG has ambitions to make India a significant focus for its steel, aluminium, and energy ambitions in line with its Carbon Neutral by 2030 strategy. But this plan was paused due to the collapse of Greensill,” said a source close to the development adding that the company is expected to make new investments in India soon.

But thanks to rising steel prices, embattled GFG Alliance has managed to strike debt restructuring with Credit Suisse Asset Management. The deal will help GFG Alliance inject £50 million of fresh funding to restart Rotherham (UK) production.

The debt restructuring comes following the collapse of GFG main lender Greensill Capital in March. After intense negotiations, Credit Suisse Asset Management (CSAM) has now agreed to a debt restructuring for LPMA, which includes integrated mining, primary steel business at Whyalla and coking coal mine at Tahmoor.

Stable financial platform

The deal will provide a stable financial platform for LPMA business and secures a recovery plan for creditors. Continued strength in the steel and coking coal markets has helped to offset the recent correction in iron ore prices.

Per the agreement, which represents the best of several options open to LPMA to achieve refinancing, the balance will be paid in instalments to CSAM and Greensill Bank, through the amended maturity date of June 2023, said the company.

The £50-million funding will help Liberty Steel UK restart the core Rotherham electric arc furnace. The provision of funding will set the platform to refinance its operations in full, create a leading long-term Greensteel hub. Funds will be allocated to LSUK through a new separate corporate entity Liberty Capital.

The restart of production at Rotherham provides an opportunity to expand recycling of scrap steel for growth markets such as infrastructure and engineering. Production ramp up will commence from this month with a plan to reach 50,000 tonnes per month soon.

Next stage of refinancing

Jeffrey S Stein, Chief Restructuring Officer, said the next stage of refinancing will be in Europe where a significant number of new lenders are expressing interest in refinancing the steel assets.

Sanjeev Gupta, Executive Chairman of GFG Alliance, said the integrated operations in Australia are now profitable and performing the best they have for many years. The deal has provided a stable financial platform for LPMA business and secures a recovery plan for Credit Suisse Asset Management and Greensill Bank.

At the same time, GFG’s injection of funding to restart the Liberty Steel UK operations is an important step to create a sustainable UK business, he said.

In India, GFG had made a strategic acquisition of Adhunik Metaliks Ltd (Adhunik) and Zion Steel Ltd (Zion) in 2020. This was followed up with the acquisition of Andhra Pradesh-based SBQ Steels in a similar transaction.

Published on October 13, 2021

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