{"id":11251,"date":"2023-11-08T18:19:45","date_gmt":"2023-11-08T18:19:45","guid":{"rendered":"https:\/\/infundpros.com\/business\/guptas-infrabuild-looks-to-sell-350mn-bond-to-help-repay-creditors\/"},"modified":"2023-11-08T18:19:45","modified_gmt":"2023-11-08T18:19:45","slug":"guptas-infrabuild-looks-to-sell-350mn-bond-to-help-repay-creditors","status":"publish","type":"post","link":"https:\/\/infundpros.com\/?p=11251","title":{"rendered":"Gupta\u2019s InfraBuild looks to sell $350mn bond to help repay creditors"},"content":{"rendered":"<div>\n<p>Unlock the Editor\u2019s Digest for free<\/p>\n<p class=\"article__content-sign-up-topic-description\"><span>Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n<p><iframe class=\"article__content-sign-up-iframe close\" scrolling=\"no\" id=\"signUpIframe\" data-prev-url=\"\/register\/in-article-sign-up?ft-content-uuid=55316b83-72fd-4852-ba71-0f8e89d156cc\"><\/iframe><\/div>\n<div id=\"article-body\">\n<p>Sanjeev Gupta\u2019s Australian steel business InfraBuild is offering to pay high interest rates to regain access to the bond market, in a deal that could help unlock funds to repay some of the metal magnate\u2019s creditors.<\/p>\n<p>Businesses within Gupta\u2019s GFG Alliance have struggled to borrow money since the 2021 collapse of its main lender Greensill Capital, which had about $5bn of debt exposure to the group. Authorities in the UK and France opened criminal investigations into GFG in the same year.<\/p>\n<p>InfraBuild is now looking to raise a new $350mn bond, with bankers at Jefferies indicating the new debt could offer yields as high as 15 per cent, according to several people involved in the deal.<\/p>\n<p>InfraBuild sounded out investors about a new bond this year, but demand was weak partly because of concerns about its proposed $600mn acquisition of Gupta\u2019s Liberty Steel USA. That acquisition has now been scrapped and InfraBuild\u2019s new bond deal is solely to refinance an existing $325mn bond ahead of its maturity next year.<\/p>\n<p>Several investors told the Financial Times that while they would not invest because of the ongoing investigations into GFG, the latest bond sale had a better chance of success due to existing bondholders\u2019 willingness to take part in the refinancing.<\/p>\n<p>Investors have long seen InfraBuild as one of GFG\u2019s stronger businesses. InfraBuild, which reported adjusted earnings before interest, tax, depreciation and amortisation of A$651mn ($417mn) at its financial year end in June, said: \u201cOur financial results show that our performance remains very strong, we continue to have strong working capital outcomes and our financing arrangement supports the continued liquidity of the business.\u201d<\/p>\n<p>While InfraBuild was able to raise a $350mn asset-backed loan this year from US funds BlackRock and Silver Point, the company recently told investors that the proceeds would be held in an escrow account until conditions set by the lenders were met. <\/p>\n<p>If the new bond deal is successful, InfraBuild has said the funds could be released to pay a dividend to \u201cSanjeev Gupta or another entity within the GFG Alliance\u201d.<\/p>\n<p>This dividend could be used to fund a repayment to some of Gupta\u2019s Greensill-related creditors, which include clients of collapsed bank Credit Suisse, according to people familiar with the plans.<\/p>\n<p>However, rating agency Moody\u2019s noted that the funds would not be released without \u201clender approval\u201d or certain \u201camendments\u201d to terms. People familiar with the transaction also noted that the originally planned deal for InfraBuild to buy Liberty Steel USA could have funded a much bigger settlement with creditors.<\/p>\n<p>Fitch Ratings stated this week that while the Liberty Steel USA deal \u201cdid not proceed, we believe there is a risk that future related-party transactions could have a negative impact on liquidity\u201d.\u00a0<\/p>\n<p>The new bond\u2019s prospectus detailed extensive related party transactions within the GFG Alliance. In addition to paying out A$52.4mn of shareholder dividends in the past two years, InfraBuild has paid GFG companies A$157.4mn under two services agreement contracts over the past three years, while paying GFG\u2019s Singapore shipping company A$40.1mn over the same period.<\/p>\n<p>While InfraBuild is one of GFG\u2019s best performing assets, its auditor KPMG last month stated that there was \u201cmaterial uncertainty\u201d and \u201csignificant doubt\u201d over its ability to remain a \u201cgoing concern\u201d. Part of this uncertainty stems from the fact that GFG offered shares in InfraBuild as security to Greensill in the weeks before the finance firm collapsed.<\/p>\n<p>InfraBuild said that this \u201csecurity is disputed and has no legal basis\u201d, however.<\/p>\n<p>The bond prospectus also revealed that InfraBuild\u2019s $350mn asset-backed loan carries an annual cost in excess of 14 per cent at present interest rates. Asset-backed loans typically charge lower interest rates because of their rights over company collateral.<\/p>\n<p>BlackRock and Silver Point can also demand repayment of the loan if certain related companies or directors are caught up in the criminal investigations into GFG, according to the prospectus.<\/p>\n<\/div>\n<p>Read the full article <a href=\"https:\/\/www.ft.com\/content\/55316b83-72fd-4852-ba71-0f8e89d156cc\" target=\"_blank\" rel=\"noopener\">here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Sanjeev Gupta\u2019s&#8230;<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[22],"tags":[],"class_list":{"0":"post-11251","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-business"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.3 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Gupta\u2019s InfraBuild looks to sell $350mn bond to help repay creditors | inFundPros<\/title>\n<meta name=\"description\" content=\"Unlock the Editor\u2019s Digest for freeRoula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.Sanjeev Gupta\u2019s Australian\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/infundpros.com\/?p=11251\" \/>\n<meta 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