The owner of the Whyalla steel mill says it is close to sealing a refinancing deal with a new group of lenders that may quell a push by its major creditor Credit Suisse to place the business into liquidation.
Billionaire steel tycoon Sanjeev Gupta’s Australian steel and mining companies said in a statement on Wednesday that it was in advanced talks with new lenders and was hoping to strike a refinancing arrangement that would allow it to pay back its creditors.
Credit Suisse’s trustee Citigroup filed wind up applications against Mr Gupta’s Whyalla mill operator Onesteel Manufacturing and coking coal miner Tahmoor Coal in the NSW Supreme Court on Tuesday evening.
The action reveals that Credit Suisse has taken assignment of the debt owed by Mr Gupta’s Australian mining and steel companies to Greensill UK. Sources close to the parties in the refinancing discussions said any refinancing deal by Gupta would cover the debt now held by Credit Suisse.
Mr Gupta’s group of companies GFG Alliance hit back at news of the Australian court action saying it had received offers of fresh lines of credit from new lenders and was in advanced talks to refinance its business.
“GFG Alliance’s Australian Mining and Primary Steel (MPS) business, which includes Onesteel Manufacturing Pty Ltd and Tahmoor Coal Pty Ltd confirms it has received multiple offers of finance from large investment funds and is in advanced due diligence.”
“The termsheets as currently proposed would provide enough cash to repay the creditors of MPS. GFG Alliance expects the confirmatory due diligence to be complete within weeks before a final offer is accepted.”
Greensill provides a service known as supply chain financing that allows suppliers to big companies to be paid earlier for a fee. These financing arrangements are then packaged up and rolled into notes that are then sold by Credit Suisse.
Greensill collapsed into administration last month after its insurers declined to renew its insurance, leading Credit Suisse to freeze $U10 billion of funds holding Greensill bonds. At around the same time, GFG Alliance withheld $US5 billion in payments owed to Greensill. It’s Australian parent company is headed for liquidation owing as much as $5 billion to creditors.
GFG Alliance initially came out swinging at Credit Suisse on Tuesday evening following news the Swiss bank had filed the winding up applications with the group unaware the investment bank had taken assignment of its debts to Greensill.
“GFG Alliance’s Australian Mining and Primary Steel (MPS) business, which includes Onesteel Manufacturing Pty Ltd and Tahmoor Coal Pty Ltd, does not conduct any financing with Credit Suisse and has not sold receivables to Credit Suisse.”
The NSW Supreme Court action on behalf of Credit Suisse is similar to action taken in the UK to recoup money allegedly owed by Mr Gupta’s entity to the Swiss bank. McGrathNicol has agreed to act as liquidator if the applications are successful.
Mr Gupta’s companies have been seeking a new financing deal for several weeks amid talks with Greensill’s administrators at Grant Thornton in the UK to allow the steel tycoon more time to prepare a rescue deal for itself.
Source: Thanks smh.com