Metals magnate Sanjeev Gupta’s GFG Alliance has reportedly struck a loan deal with commodities giants Glencore and Trafigura to safeguard its aluminium division from looming collapse.
Glencore would provide a six-year loan to acquire most of the outstanding debt of Alvance group’s vast smelter in Dunkirk, France, and an associated rolling mill in Duffel, Belgium, according to an internal GFG memo seen by Bloomberg.
It will also assist with selling on aluminum products, with the two merchants both supplying raw materials.
A spokeswoman for Trafigura confirmed the outline terms of the deal, said to be worth up to $450million.
In a statement, Gupta said the group was “targeting an amicable settlement of their debts using the facilities agreed with Glencore.”
The lifeline would give the Indian-born tycoon the financial firepower to see off a buy-up offer from American Industrial Partners (AIP).
That deal was brokered by his top aide Jay Hambro, who would have left to join the US private equity firm: the knock-down price on offer reportedly caused a rift between the pair.
Gupta has been fending off creditors since the collapse of his main lender Greensill Capital in March and in the UK his empire - which employs 35000 globally - is being investigated by the Serious Fraud Office.
The price of aluminium - used to make everything from tin cans to aeroplane parts - has surged by 24 per cent this year to almost $2,500 a tonne, a three-year high, as economies recover from the pandemic.
Gupta still has to refinance massive debts on his European steel assets, which may prove more problematic.
In response to earlier reports regarding the talks, GFG Alliance said: “GFG continues to focus on the restructuring and refinancing of its businesses following the collapse of Greensill Capital. The Alvance portfolio is performing well supported by strong market conditions.”
The deal would be the first to be completed under Glencore’s new CEO Gary Nagle, who took the helm of the sprawling commodity trading business this week following the retirement of Ivan Glasenberg.
Eyebrows have been raised in the City over the alliance between Glencore and Trafigura - who share a common ancestor in Marc Rich & Co - but have been bitter rivals for three decades.
AIP, which holds a chunk of the debt of both Dunkirk and Duffel, has yet to comment.