Thousands of South Australians are looking to the federal government for assurance as the future of Whyalla Steelworks operations remain uncertain.
Whyalla’s owner, Sanjeev Gupta, chairman of GFG Alliance, was taken to court by Credit Suisse on Tuesday over the financial collapse of one of its biggest lenders, Greensill. Following its collapse, Credit Suisse is trying to recover a portion of its billions of finance by breaking up Gupta’s Australian assets.
If the creditor is successful, it could end two operations under Gupta and send OneSteel Manufacturing, which runs Whyalla Steelworks, and Tahmoor Coal into liquidation.
GFG Alliance assured the public and told InDaily on Wednesday that it had received multiple offers of finance from large investment funds and is currently in advanced due diligence.
“The term sheets as currently proposed would provide enough cash to repay the creditors,” the spokesman said in the statement. “GFG Alliance expects the confirmatory due diligence to be complete within weeks before a final offer is accepted.”
South Australian Treasurer Rob Lucas tried to reassure OneSteel employees, saying they shouldn’t jump to any “alarmist conclusions” as the legal action had just begun.
“GFG has continued to ensure the market, and the government, that they are confident they’re going to be able to manage a refinancing of their relationship they’ve got with Greensill,” Lucas told ABC. “We can only take them at their word at this particular stage, and we’ll have to wait and see the results of their attempted renegotiation of finance.”
He also said the company had not sought further financial assistance from the state government, as GFG had said they were confident of refinancing.
Whyalla Mayor Clare McLaughlin also called for calm in the community, telling Whyalla News that GFG had assured the local council that it would “vigorously” defend the legal proceedings and face the legal challenge head-on.
“These are all encouraging signs, so we implore the community to remain positive as this process plays out and to not jump to conclusions based on speculation,” McLaughlin said.
South Australian MP Rowan Ramsey said it was too early to panic, noting that GFG had recently announced the strong performance and positive cash flows of their Australian businesses.
“We need people to stay calm as we work our way through the issues,” Ramsey said. “I can assure the residents and businesses of Whyalla we are watching the space closely.”
A directions hearing for the legal proceedings will begin on May 6.