Sanjeev Gupta has lost control of a Belgian aluminium mill to private equity firm American Industrial Partners, effectively dismantling the metals magnate’s continental European aluminium business.
Gupta’s metals group GFG Alliance, which is the subject of criminal investigations into alleged fraud and money laundering in the UK and France, has been battling to refinance more than $5bn of debt after the collapse of its main lender Greensill Capital last year. GFG has denied wrongdoing.
AIP, a US buyout firm that specialises in taking over and operating industrial businesses, announced on Tuesday that it had taken control of an aluminium rolling mill located in Duffel, Belgium from Gupta.
The metals facility is the second that the US group has seized from GFG in the past year, after it successfully took over Europe’s largest aluminium smelter in Dunkirk, France in October.
In both instances, AIP bought up debt from the original lenders and then called a default. In the case of Duffel, the US buyout group acquired a €96mn loan from Asian investment firm Tor Investment, which sat at a UK holding company that owned the aluminium mill.
AIP said it had taken the action due to the “failure” of Gupta “to refinance the company in the 11 months since the July 2021 defaults” on this loan. In a progress report published in February, the administrators of the UK holding company also said that efforts to repay the debt had “stalled” and it had not “received satisfactory proposals from Mr Gupta and his representatives”.
“We look forward to proceeding under the new ownership of AIP, who is committed to a sustainable future for our company,” said Duffel’s general manager Geert Vannuffelen. “We are positive about the steps AIP has taken to further invest in the company, which demonstrates their engagement to reach the full potential of our plant.”
The loss of the Belgian mill is a big blow to Gupta, whose Alvance aluminium business has now lost control of all of its operations in continental Europe, leaving it with just one smelter in the Scottish highlands.
It comes days after Gupta failed to have a legal attempt to wind up three of his UK steel businesses thrown out on the grounds that their problems were caused by the coronavirus pandemic. The judge in that case also noted that the metals magnate’s efforts to raise fresh financing had foundered, arguing it “is more likely than not that the reason for not securing alternative finance is a failure to produce financial information to a funder to support finance.”
Gupta last year lined up financing from commodity trader Glencore in a bid to repay outstanding debts at Dunkirk and Duffel, but the deal fell apart after AIP successfully manoeuvred to push two British holding companies that owned the assets into administration.
GFG late last year sued one of AIP’s funds in an attempt to reclaim the Dunkirk smelter, arguing that the buyout group’s refusal to accept a $180mn transfer to repay a debt was made in “bad faith” in an effort to “appropriate” the smelter.
AIP has rejected the allegation, arguing that accepting the payment might have constituted a “benefit from criminal conduct”, after it claimed the French government told it “there were grounds to believe” the funds had been “misappropriated” from a steel mill in eastern Europe. The Financial Times reported last month that documents showed GFG transferred money from a steelworks in the Czech Republic in an attempt to settle the debt with AIP.
GFG said on Tuesday that it was “committed to take all steps possible to fight against AIP’s premeditated, predatory manoeuvres to seize our Dunkirk and Duffel assets on the cheap”.
The company confirmed it had launched multiple legal actions against the US private equity firm following its refusal of debt repayment from GFG and Tor Investment. It added that it continued to make “solid progress restructuring its businesses across the globe”.
It noted that its recent standstill agreement with Greensill Bank, its largest creditor that lent it €2.2bn against several of its European steelworks, demonstrated it was getting close to a “consensual debt restructuring that is in the best interests of all our stakeholders”.