Advertisement

GFG strikes deal to secure Whyalla steelworks

Whyalla steelworks owner GFG Alliance says it has agreed to a debt restructuring plan for its Australian operations, ending six months of uncertainty around the plant’s future.

Oct 11, 2021, updated Oct 11, 2021
Photo: Adam Jenkins/Flickr

Photo: Adam Jenkins/Flickr

The company says the debt restructuring deal with Credit Suisse Asset Management for LIBERTY Primary Metals Australia gives the business clarity and stability and secures a clear recovery plan for creditors.

Industrialist Sanjeev Gupta’s global empire has been under immense pressure since his firm’s major supply chain financier Greensill Capital filed for insolvency in the UK at the start of March after billions of dollars of its credit insurance expired.

In Australia, Citibank, on behalf of Credit Suisse Asset Management, lodged an application in the New South Wales Supreme Court in April to wind up the operations of Gupta’s OneSteel Manufacturing and Tahmoor Coal Pty Ltd.

Successful legal action could have forced the Whyalla steelworks – the town’s biggest employer with around 1200 workers and a further 600 who work in the associated Middleback Ranges mines nearby – into liquidation.

However, the court action was put on hold in May to allow more time for a debt restructure to be finalised.

The debt restructuring deal announced today follows LPMA’s record-breaking performances which saw the business grow revenues from $1.96 billion in FY 2020 to $2.52b in FY 2021.

The company says continued strength in the steel and coking coal markets has helped to offset the recent correction in iron ore prices.

“The strength of the LPMA business will enable it to make a substantial upfront payment to Greensill Bank and CSAM, which has been closely involved in GFG’s work to refinance and restructure its portfolio following the collapse of GFG’s main lender Greensill Capital,” it said in today’s statement.

“Under 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.”

The global company has also announced $A93 million cash injection to re-open an English steelworks to safeguard hundreds of jobs in the UK.

The Federal Government this week approved the expansion of the Tahmoor coking coal mine in New South Wales. The approval follows conditional approval granted by NSW authorities in April for a 10-year extension of the mine life at Tahmoor and will allow for the mining of an extra 33 million tonnes of high-quality metallurgical coal used in steelmaking and manufacturing.

Executive chairman of GFG Alliance Sanjeev Gupta said the Australian operations were now profitable and performing the best they had for many years.

“The deal we have agreed today provides a stable financial platform for our LPMA business and secures a recovery plan for Credit Suisse Asset Management and Greensill Bank following the collapse of Greensill Capital,” he said.

“I’d like to thank all our stakeholders – government, union representatives, customers, suppliers and of course our employees and the local community – for the support they’ve shown GFG Alliance as we managed our way through the challenges created by the Greensill collapse.

InDaily in your inbox. The best local news every workday at lunch time.
By signing up, you agree to our User Agreement andPrivacy Policy & Cookie Statement. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

“I care deeply about this community and remain committed to our long-term vision to transform Whyalla into a modern GREENSTEEL hub.

“Enormous progress has been made since March and we are on track to deliver a refinanced, refocussed business able to deliver our GREENSTEEL vision and build value for all our stakeholders.”

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 at the start of the coronavirus pandemic.

City of Whyalla Mayor Clare McLaughlin said confirmation of the much-needed refinancing was fantastic news.

“This announcement should put an end to the ongoing negative speculation surrounding our city, allowing us to focus on the numerous new developments that will reshape our future,” she said.

“Whyalla has been right behind GFG and Mr Gupta throughout this entire period of speculation, as we were confident in the future of GFG’s local operations.

“We have reinforced that Whyalla will only continue to strengthen and is now perfectly poised to capitalise on the exciting opportunities ahead.

”This news will stimulate confidence in the private sector and may well open the doors to additional new investment in complementary projects that will drive the greening of heavy industry and energy production.”

Local News Matters
Advertisement
Copyright © 2024 InDaily.
All rights reserved.