AFR Reports Several Related Party Transactions in GFG Alliance
Australian Financial Review reported that the mountain of related-party transactions between entities in Mr Sanjeev Gupta’s complex web of companies is reinforced in one of his lesser-known Australian entities. As per AFR report “The financial accounts for Liberty OneSteel Corporate Services Pty Ltd, lodged with the Australian Securities and Investments Commission for the 12 months ended June 30, 2020, audited by KPMG, underline the interdependency of the Gupta companies. The accounts state the company was in a net liability position at June 30, 2020, as its activities have been funded through loans from a related party, which the company identifies as wholly-owned members of the Liberty InfraBuild Ltd group. The InfraBuild group has certain priority financing agreements in place which means early repayment of the company’s AUD 26 million owing to InfraBuild group is not likely.”
The accounts of Liberty OneSteel Corporate Services state that a letter of support had been provided by the ultimate parent entity, Liberty Steel Group Holdings Pte Ltd, which is registered in Singapore, to be able to carry on its business and meet liabilities when they fall due.
The accounts show the company had loans receivable from OneSteel Manufacturing Pty Ltd of AUD 18.9 million and there were loans from InfraBuild (Manufacturing) Pty Ltd of AUD 26.4 million, OneSteel Manufacturing Pty Ltd of $10 million and InfraBuild Trading Pty Limited of AUD 6.2 million. But the accounts also reveal there was uncertainty at the end of October 2020 about whether this particular entity would be able to keep going. The accounts state “There remains, however, a material uncertainty as to whether the Company can continue to operate as a going concern into the foreseeable future given the need to secure further shareholder support in order to meet its loan obligations to related parties.”
Infrabuild is the large structural steel business mainly based on the east coast of Australia which runs two steel mini-mills, a large steel distribution business and a national metal recycling network. With annual revenues of AUD 4 billion, it is regarded by analysts and credit rating agencies as one of the better businesses in the GFG Alliance globally. Japanese bank Nomura has bought a small slice of Infrabuild’s debt in the past few weeks as it positions itself for a potential restructuring.