Analysis and Commentary

Infrabuild to the rescue as loan bolsters GFG Alliance

Analysis and Commentary

UK billionaire Sanjeev Gupta has again relied on his successful Australian steel businesses to bolster his GFG Alliance group’s finances, with steel manufacturer and distributor Infrabuild confirming a new secured loan.

InfraBuild closed a $537 million (USD350 million) Senior Secured Asset-Backed Term Loan led by funds and accounts managed by BlackRock and Silver Point Finance.

Infrabuild operates recycling operations feeding two electric arc steel furnaces and eight product manufacturing mills in Australia as well as a manufacturing facility in Dalian, China.

The company also operates recycling centres in Poland, the US and Hong Kong.

GFG Alliance said the loan came as ‘the InfraBuild business had ‘maintained its strong financial performance through the first three quarters of its 2023 fiscal year and the successful financing is an important achievement to facilitate the continued growth of the business’.

InfraBuild Interim CEO and Managing Director Dak Patel said: “This financing provides strategic capital to InfraBuild, which will enable us to continue to grow our business and service a customer base which spans the infrastructure, commercial and residential construction, agriculture and mining markets.

“The business has continued to perform strongly throughout this financial year and the Asset-Backed Term Loan provides us with capital to focus on strategic initiatives to strengthen operations and capitalise on the growing demand for lower carbon sustainable steel as we continue the momentum we’ve built in recent years.”

GFG Alliance also foreshadowed the potential acquisition by Infrabuild of steel assets in the United States currently owned by GFG.

Potential acquisitions include:

  • Keystone Consolidated Industries (KCI), comprising an Electric Arc Furnace (EAF), rolling mill and wire mill at Steel and Wire (Peoria), mesh manufacturing sites from Engineered Wire Products (Ohio and New Mexico)
  • Johnstown Wire Technologies (Pennsylvania and Ohio)
  • And Georgetown steelworks (South Carolina).

This is not the first time Gupta’s Australian businesses have performed at levels allowing them to attract finance to their operations.

Previously his global business was faced with potential insolvency when its main financier Greensill Capital collapsed.

According to the Financial Times, defaults by GFG Alliance were partly responsible for Greensill’s ultimate insolvency.

At that time, GFG’s Liberty Primary Steel business which operates the Whyalla blast furnace was performing strongly, enabling the Australian business to be one of the first in the group to attract new sources of finance and emerge on a sound financial footing.

According to GFG Alliance InfraBuild is continuing to explore various additional financing alternatives, the proceeds of which would be used together with Asset-Backed Term Loan proceeds, to further drive its growth and potential acquisition of steel assets in the US.

Picture: Infrabuild

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