UK billionaire Sanjeev Gupta says he will try to sell his stake in a troubled coal mine to prop up his Whyalla steelworks, as part of a deal to settle billions of dollars of debt linked to a financier’s collapse.
Gupta, the chairman of GFG Alliance, said on Friday a debt settlement deal had been reached with creditors of global financier Greensill Capital, which had advanced billions of dollars in credit to GFG before it collapsed in 2021.
But the deal, which GFG said would be the “final chapter” in clearing worldwide debts of up to $US4 billion ($A6.3 billion), is subject to final legal agreement and will return to court in the UK in six weeks.
GFG had launched an “expedited process” to sell its equity in the Tahmoor Coking Coal mine in NSW and some of the proceeds from the sale would be available for reinvestment in Whyalla, allowing the firm “to catch up with supplier payments and boost liquidity, subject to board approval”, the company said.
The Tahmoor sale could reportedly be worth up to $800 million.
Production at the mine halted in January and workers were sent home on full pay, after suppliers stopped deliveries over unpaid bills.
GFG has also been under intense pressure from the SA government to pay tens of millions of dollars owed to creditors of the Whyalla steelworks and the government, including $15 million to SA Water.
The state government has refused to commit to funding the $600 million hydrogen jobs plan, based around a 250 MW electrolyser and a 200 MW green hydrogen power plant near Whyalla, because of the problems.
The company announced in January that the plant had cast its first steel following a four-month shutdown that halted production and cost the company millions.
“Today’s agreement with the Greensill creditors is a great relief for GFG and … gives us a financial platform for recovery and growth,” Gupta said on Friday.
“With signs of improvements at our operations and some upturn in our markets, we are confident of being able to access longer-term financing to build on the significant investments we have already made in our international businesses, and to rebuild stakeholder confidence.”
The $150 million in financing Gupta was seeking had been expected to be finalised before the end of 2024.
SA Premier Peter Malinauskas, who visited Whyalla on Tuesday to “gather intelligence” from GFG’s creditors, said he welcomed the news.
“It is on the face of it good news, but I approach it with great caution,” he said on FIVEAA in Adelaide.
“And the reason why I say that is because I’ve seen a number of statements by GFG over the months and years – some as promising as this one – and they haven’t fully materialised.”
As the nation’s only structural steel manufacturer, the steelworks are crucial to Australia’s long-term economic sovereignty.
Mr Gupta has been criticised for pursuing planning approval for major renovations to his $34 million Sydney mansion, while his company was failing to pay its debts.
AAP
