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Whyalla steelworks court case still set to begin despite refinancing deal

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A court case that aims to wind up operations at the Whyalla Steelworks is still set down to begin this morning, despite an eleventh hour announcement by Sanjeev Gupta’s GFG Alliance yesterday that a refinancing deal for its Australian operations had been agreed.

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In a statement yesterday afternoon, GFG said its subsidiary LIBERTY Primary Metals Australia had agreed terms to refinance its exposure to Greensill Capital, which collapsed in March.

“The new financing is sufficient to pay out its Greensill debt in full and to provide ongoing working capital for the LPMA group, which includes the integrated mining and primary steel business at Whyalla and its coking coal mine at Tahmoor,” the statement from a GFG Alliance spokesperson said.

However, GFG’s first hearing in the NSW Supreme Court is still set down to commence at 9am this morning following an application by Citibank to wind up its Australian manufacturing operations.

Citibank is acting on behalf of Credit Suisse, which is looking to recover billions of supply-chain finance funds globally after Greensill was placed into administration in March.

The refinancing offer is understood to have been struck with San Francisco-based White Oak Global Advisors and is worth $430 million.

The GFG Alliance spokesperson said the offer was subject to customary conditions precedent and documentation, “a process which has commenced and is expected to complete within four weeks”.

“GFG Alliance is in continuous discussions with multiple financiers on a competitive basis for various parts of its business and is committed to securing sustainable funding solutions to replace funding provided by Greensill,” the spokesperson said in the statement.

The Whyalla steelworks is the town’s biggest employer with around 1200 workers and a further 600 work in the associated Middleback Ranges mines nearby.

UK-based Sanjeev Gupta was hailed a saviour of the Whyalla business and town after former steelworks owner Arrium went into administration and he took it over in 2017, vowing to improve and expand the operation.

GFG had planned a $1 billion upgrade at Whyalla but that was delayed by up to seven years last year as the global alliance flagged huge cuts amid sluggish steel sales amid the coronavirus pandemic.

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