Gupta fights lender’s efforts to seize control of aluminium mill

Sanjeev Gupta is battling to hold on to a Belgian aluminium mill after a US private equity firm took legal action in the UK to seize control.

Gupta’s metals group GFG Alliance, which is the subject of an investigation by the UK’s Serious Fraud Office, has been fighting to refinance more than $5bn of debt after the collapse of Greensill Capital, its main lender. 

But the lender to GFG’s rolling mill in Duffel outside Antwerp — which people familiar with the matter said was private equity firm American Industrial Partners — launched legal proceedings in the past week.

AIP successfully persuaded a court to appoint administrators at a UK holding company that owns the asset. The process could result in ownership of the Duffel mill transferring to AIP, the holder of the $59m debt.

A spokesman for GFG said it is “vigorously challenging” the administration. “A full refinancing package for the Duffel business has been agreed with a major international group, which would see all of Duffel’s creditors paid in full, and we expect that process to complete soon,” GFG added.

AIP did not immediately respond to a request for comment.

The proceedings are the latest in a flurry of legal challenges Gupta has faced from creditors this year. The Indian-born industrialist recently won a reprieve from Credit Suisse — a leading investor in Greensill debt — after it earlier tried to force some of his companies out of business over unpaid debts. Meanwhile, GFG has said it will “co-operate fully” with the SFO probe, which was announced in May.

AIP’s challenge threatens to complicate a rescue loan Gupta recently negotiated with commodity trader Glencore, which is offering to refinance the debt across his European aluminium business. The London-listed miner and trading firm has offered to refinance some of the more than $500m of debt at both the Duffel site and its French sister plant in Dunkirk with a new six-year loan.

Earlier this year, AIP bought up all of the Duffel plant’s debt and a portion of the debt at the Dunkirk aluminium smelter, while approaching Gupta with an offer to buy the two assets.

In a memo to senior management last week, Gupta confirmed that the group had rejected AIP’s bid for the two assets, adding that GFG was “targeting an amicable settlement of their debts using the facilities agreed with Glencore”. 

However, people familiar with the situation said it could result in Gupta maintaining control of the French smelter, but losing control of the Belgian mill to the US private equity firm. 

Glencore is primarily interested in the Dunkirk aluminium smelter, which is the largest in Europe and produces 280,000 tonnes of the lightweight metal a year. The deal would give Glencore access to metal it could sell on through its vast trading arm. 

In his memo to staff, Gupta said that GFG has struck deals with the London-listed group and rival trading house Trafigura to supply raw materials to Dunkirk and Duffel, while Glencore would also “assist in marketing of products and provide hedging facilities”.

“These agreements will help secure the working capital needs of the businesses and allow us to de-risk the business by capturing the current strong prices,” Gupta said.