In businesses large and small right around Australia the message from management to employees is the same: if you work hard and successfully, you´ll be rewarded as the company prospers. However, this theory can come unstuck if you´re part of a conglomerate, and especially when some of the entities in that conglomerate are underperforming and need rescuing – with the profits you made. Many InfraBuild employees may be sensing this corporate reality at present. The problem is GFG Alliance, which is privately owned by the British industrialist, Sanjeev Gupta, and his family. Mr Gupta´s global steel portfolio has been unravelling since its principal financier, Greensill Capital, collapsed in 2021. In those days, four years ago, InfraBuild was a profitable business, the star performer in Mr Gupta´s Australian operations. However, with Mr Gupta suddenly owing billions of dollars to creditors, InfraBuild has increasingly been used to fill financial holes in Gupta´s ailing and discredited empire. It has now reached the point where, in the six months to 31 December, 2024, InfraBuild returned a half year loss of $81.3 million. The company’s finances were disclosed in a presentation recently sent to InfraBuild bondholders, which

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also noted the company is owed $156 million by the Whyalla steelworks. The accounts showed a 9% slump in revenue to $2.24 billion, with earnings before interest and tax down 68% to $46 million. Debt levels have increased by $200 million to $1.19 billion. The accounts also showed $16.2 million had been booked, “recognised as one-off significant items relating to professional fees incurred in relation to creditor settlement and restructuring expenses”.

On 27 February, InfraBuild issued a statement saying: “InfraBuild is a strong business with a resilient supply chain and its liquidity remains robust with strategic measures in place for it to manage any challenging local or global steel market conditions”. On 12 March, the CEO, Francisco Irazusta, declared “business as usual” at InfraBuild. However, the fact the company´s directors have now invoked “safe harbour protection” raises the question of the company´s proximity to insolvency. Furthermore, InfraBuild´s auditor, KPMG, continues to withhold its signature from the company’s FY24 accounts, originally due with the Australian Securities and Investments Commission last October. Interestingly, records show that in the financial years 2022-2024, InfraBuild paid $76 million to other GFG Alliance companies under a “corporate services agreement” and in FY24 wrote off $56 million of bad debts to Gupta’s failed business in the Czech Republic. Also, in FY24, InfraBuild loaned Mr Gupta $10 million personally, then retrospectively reclassified $5.7 million of this amount as a “corporate expense” as determined by an alleged “external expert”. Furthermore, it has been widely reported that InfraBuild has paid more than $110 million for professional advice relating to the Greensill Capital settlement. That is, on a settlement to which InfraBuild is not a party, and concerning debts it didn´t generate.

In February, one of InfraBuild’s bondholders, FitzWalter Capital Partners, filed a lawsuit in New York demanding InfraBuild immediately repay more than $800 million. In its court filings, FitzWalter said it´s concerned Sanjeev Gupta intends to fund payments to GFG Alliance’s creditors with dividends of distributions from InfraBuild, in violation of its deal with bondholders. InfraBuild has publicly stated the complaint is without foundation and has no factual basis. Meantime, Credit Suisse, which is now part of UBS, is still pursuing GFG for $US1.3 billion in debts. It´s worth remembering some of Mr Gupta’s colossal Greensill Capital debt was secured against either GFG’s normal invoices to its customers – some of which were allegedly falsified – or through its fantasy invoices to “prospective” customers that had never done any business with GFG. The UK’s Serious Fraud Office is investigating; GFG denies wrongdoing. Concurrently, Mr Gupta is being prosecuted by Companies House in the UK over his alleged failure to file accounts for more than 70 companies under the GFG Alliance umbrella.

Elsewhere in Australia, at the Whyalla Steelworks, the administrator KordaMentha has expressed further shock at the dilapidated state of the operations. “Clearly very little maintenance has been done since we were last here,” KordaMentha partner, Sebastian Hams, told the ABC. KordaMentha was last at the steelworks in 2016/17 when the previous owner, Arrium, went into administration. In a further twist, fellow partner, Mark Mentha, told the Australian Financial Review that, in the months before the company went into administration, it had been asking customers to prepay for steel that had not yet been made. “Customers were contacted on the basis that if they made a prepayment, I’m not sure what the terms were, in terms of the discount or the like, then they probably got a better price on the basis of the pre-payment,” Mentha said. The prepayments sought by Gupta’s company pulled forward some cash, which was therefore not available to the administrator.

Meanwhile, BlueScope Steel has confirmed it has been appointed to the role of advisor to the Whyalla Steelworks. Under the agreement with the administrator, BlueScope will provide in-kind technical and operational support. In a statement, BlueScope said it will not be committing any capital or other corporate support to the administration process. Nor has it made a decision to participate in any sale process or purchase any assets at this stage. Any decision to do so would be subject to due diligence and BlueScope’s return on investment hurdles.

BlueScope’s Managing Director and Chief Executive Officer, Mark Vassella, said, “BlueScope has a longstanding history with the Whyalla Steelworks, and we know its people and assets well. We recognise the ongoing importance of Whyalla to the Australian economy and sovereign capability. Accordingly, we will provide a team of experts from Port Kembla Steelworks to assist the administrators work through their process.”

InfraBuild is the Whyalla Steelworks´ largest customer. It is therefore of vital importance to the steelworks that InfraBuild remains a smoothing-functioning and viable enterprise. The federal and South Australian state governments no doubt feel the same way – given they are in the process of tipping $2.4 billion into resuscitating the steelworks to ready it for sale. Similarly, hundreds of steel distribution and retail businesses all over Australia depend on the supply of steel products from InfraBuild: not to mention those people who actually work for the company. Decisions made over the next several months will have far-reaching effects.