Sanjeev Gupta’s Australian steel business has been canvassing investors for a bond sale in a major test of whether institutions are willing to lend to the metals tycoon despite an ongoing criminal investigation into his business empire.

Executives from metals recycling and distribution firm InfraBuild met with bond fund managers in New York last week, the first time one of Gupta’s companies has met with a wider group of investors since the collapse of his major lender Greensill Capital, which plunged his businesses into crisis in 2021.

While the investor meetings – which continue in London this week – are not a formal bond road show, the company and its bankers at Jefferies have been informally canvassing investors about a potential bond issue, according to people familiar with the meetings.

Investors were asked if they would consider buying a new U.S. dollar bond yielding about 14 percent, the people added, with the company eyeing a deal of up to A$1 billion ($670 million).

They said the higher yields were offered to offset the reputational risks of loans to the Gupta-owned company, whose GFG Alliance group of companies is under criminal investigation United Kingdom and France.

InfraBuild told investors it does not believe it is a target of these investigations.

Investors have long viewed InfraBuild as one of GFG’s stronger businesses β€” and unlike it many other companies the group has its accounts audited by a Big Four firm – but several investors told the Financial Times they were unwilling to lend to the company.

“The underlying business is not terrible, I just don’t want to walk into the office one day and have bad headlines,” said one New York-based bond fund manager. β€œIt’s just not worth my time.

GFG said: “InfraBuild continues to perform strongly and has secured the support of top investors for its growth plans.”

InfraBuild recently secured a $350 million asset-backed loan from US funds BlackRock and Silver Point.

The new bond deal would be used to refinance InfraBuild’s $325 million bond outstanding, as well as raise money for a potential acquisition of Gupta’s US steel business.

The deal would also free up money for Gupta to repay some of the billions of dollars he still owes to Greensill Capital investors who bought packaged loans to his companies, according to two people familiar with the plans.

It wouldn’t be the first time InfraBuild has bought assets from its owner, having bought smaller metal recycling businesses in the US and Poland from Gupta in 2021.

InfraBuild’s first bond offering in 2019 he fought attract demand. Even after the company reduced the bond by one-third to $325 million, the company had to offer a 12 percent interest rate to attract investors.

While the deal allowed InfraBuild to move away from using financing from Greensill, weeks before Greensill collapsed, it filed documents indicating that it had assumed security for all of InfraBuild’s equity.

GFG told the FT that this shareholding was “disputable and has no legal basis” as it was conditional on Greensill providing “substantial facilities” which “did not materialise”.

InfraBuild does business with other companies in the wider Gupta group – for example, it buys steel billets from Whyalla Steel Works – and its accounts for the year to June 2022 show it booked purchases from related parties of A$612 million and A$78 million. .

Gupta’s use of related party transactions has drawn scrutiny elsewhere. Bank of England conviction his UK lender Wyelands Bank for “extensive significant regulatory failures” earlier this year following an investigation into the bank’s extensive lending to Gupta companies.

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