Dunkirk smelter deal provides a window into GFG’s complex web of financing

LONDON (Reuters) – Sanjeev Gupta’s $500 million purchase of Europe’s largest aluminium smelter from Rio Tinto in 2018 was the steel tycoon’s first big industrial deal financed through traditional bank debt. Gupta’s GFG Alliance, a sprawling network of hundreds of privately-held companies with interests spanning steel, aluminium, mining, financial services and real estate, publicly announced the five-year term loan with a syndicate of banks. Behind the scenes, however, GFG had tapped British finance firm Greensill and U.S. asset manager BlackRock for additional funding via a complex chain of holding companies, according to two sources with direct knowledge and documents seen by Reuters. The extra borrowing enabled Gupta to minimise the amount of cash that he had tied up in the purchase of the Dunkirk aluminium smelter in France, the two sources said. They said the original syndicate of banks and commodity trader Trafigura were unaware of the additional funding, which Gupta used to cash in some of the equity he had pledged for the purchase of the smelter. A spokesman for GFG Alliance declined to comment on its financial arrangements. Trafigura and Greensill’s administrators declined to comment. GFG Alliance’s complex corporate structures and financing arrangements are proving problematic as Gupta… continue reading

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