GFG Australia gains financing to acquire GFG US wire rod assets

InfraBuild, the Australian steel and recycling unit of London-based GFG Alliance, has secured a $350 million loan to acquire US-based wire rod steel businesses from its parent company.

Jefferies LLC acted as sole arranger on a senior secured asset-backed term loan by funds and accounts managed by BlackRock and Silver Point Finance, GFG stated Monday May 29

The success of funding "exceeded expectations" in terms of total funds raised, an industry source familiar with Liberty Steel's US operations told Fastmarkets Thursday June 1.

There is no immediate impact on Liberty Steel's wire rod businesses in the US, as those business "have already been an operating part of the group and this just formalizes that," the source added.

InfraBuild said it will continue to explore various additional financing alternatives that can be used together with the proceeds of the asset-backed term loan, “to further drive its growth and potential acquisition of steel assets in the US.”

The businesses to be acquired currently operate under GFG’s Liberty Steel USA and include the following:

  • An electric arc furnace, rolling mill and wire mill in Peoria, Illinois (formerly Keystone Consolidated Industries, now Liberty Steel & Wire);
  • Wire mesh manufacturing sites in Upper Sandusky and Warren, Ohio, as well as Las Cruces, New Mexico (Liberty Steel Engineered Wire Products);
  • Johnstown Wire Technologies in Johnstown, Pennsylvania, and Solon, Ohio;
  • Liberty Steel Georgetown, in Georgetown, South Carolina.
InfraBuild owns recycling facilities in LaPlace, Louisiana, and Tampa, Florida.

InfraBuild's acquisition of Liberty USA assets follows an in-principle agreement Liberty Steel Group reached with its main creditors last November to restructure its global debt, excluding that relating to Liberty’s European steel business.

The main creditors in the agreement are Greensill Capital Ltd in the United Kingdom and Greensill Bank AG and Credit Suisse Asset Management Ltd in Switzerland. 

The successful funding of the acquisition of Liberty Steel's wire rod business helps to complete "the unwinding of some obligations as a result of the terms of the failure of Greensill," the US steel industry source said.

Greensill lent funds to companies by buying up invoices in advance and it collapsed in March 2021 after credit insurers backed away the from the company over concerns about its exposure to GFG Alliance.

After Greensill failed, Credit Suisse launched an effort to recover $10 billion in funds trapped in Greensill Capital.

Repayment to creditors under an agreement reached last year is to be made through a combination of lump-sum, schedule and bullet repayments, according to Liberty Steel Group.

InfraBuild's purchase of the US businesses can provide funds to Liberty Steel Group that can be used for the initial lump-sum payment to its creditors, according to the industry source.

The negotiations that led to the agreement were launched after Liberty Steel Group reached an agreement June 13, 2022, with its largest creditor, Greensill Bank, to pause all enforcement actions regarding debt facilities relating to its European steel businesses.

GFG Alliance is the parent company of Liberty Steel Group, Europe's fourth-largest steelmaker, with a combined annual rolling capacity of 10 million tonnes per year. Its European operations employ 14,000 people across seven steelworks and five service centers.

 

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