GFG Alliance gets $465 mln in working capital for Australian ops

Friday, Feb 22, 2019

GFG Alliance, a privately held metal and energy conglomerate that is building a steel business in Australia, said on Thursday it has secured $465 million in working capital from two boutique lenders.

London-headquartered GFG said in a statement it has agreed new credit lines from U.S.-based White Oak Global Advisors LLC and Greensill Capital UK Ltd for A$650 million ($465 million) for working capital management and planned growth opportunities.

“The execution of these facilities ... provides us with additional support to take full advantage of the growth opportunities that we currently see in the Australian domestic market,” GFG Alliance executive chairman Sanjeev Gupta said.

GFG has spent billions in recent years on troubled steel and aluminium plants and investing in renewable energy assets around the world, raising questions over funding for its rapid expansion.

The company bought the Whyalla steel mill in South Australia state in 2017 and plans to produce 1.8 million tonnes of high-end steel a year, rising eventually to up to 10 million tonnes.

White Oak, an investment advisor that offers private loans to small and medium sized businesses, will offer a secured term syndicated borrowing base facility, GFG said. Greensill, a UK based provider of working capital finance, will offer a secured revolving credit facility and supply chain financing facility.

Australian media reported late last year that GFG had been paying suppliers and contractors at the Whyalla steel works later than 30 days, leading local politicians to raise questions about the group’s payment terms.

A GFG spokeswoman told Reuters on Thursday that the new funds would used in the normal course of business, including investments, working capital management and other expenses.

“In relation to Whyalla suppliers, we have committed to paying outstanding suppliers before March. We are still on track to do so,” she said.

GFG, which is looking at possible stock market flotations for parts of its business, said late last year it plans to list up to 40 percent of its manufacturing, distribution and recycling business in Australia in 2019.

The working capital revenue would not affect any Australian IPO plans, the spokeswoman said on Thursday.



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