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GFG Alliance launches legal action to reclaim control of European smelter

Alvance British Aluminium smelter, Ben Nevis, Fort William.
GFG executive chairman Sanjeev Gupta.

Lochaber smelter’s crisis-hit owner GFG Alliance says it has launched legal action against American Industrial Partners (AIP) after the private equity firm was reported to take control of the shares of its Belgian aluminium plant.

It follows what GFG (Gupta Family Group) maintains is AIP’s “refusal of debt repayment” from GFG Alliance in a move that “mirrors their acquisition” of another metals business, Alvance Aluminium Dunkirk.

The claim follows last month’s decision by a Belgian court to overturn the decision to appoint administrators to GFG steel plants in Liege, paving the way for imminent restart of production.

Last year, GFG Alliance launched a claim against AIP in London’s High Court to reverse AIP’s acquisition of the company’s aluminium smelter in Dunkirk.

“GFG is committed to take all steps possible to fight against AIP’s premeditated, manoeuvres to seize our Dunkirk and Duffel assets on the cheap,” said a GFG Alliance spokesperson.

Sanjeev Gupta.
Sanjeev Gupta.

“GFG continues to make solid progress restructuring its businesses across the globe and today’s standstill agreement with Greensill Bank demonstrates we are getting close to a consensual debt restructuring that is in the best interests of all our stakeholders.

“Our core businesses continue to perform well and are operationally strong despite some economic headwinds.”

GFG filed its lawsuit against one of AIP’s funds in the UK High Court of Justice in January (2022).  The AIP fund filed a response in the same court in March, denying GFG’s allegations.

The US firm’s filing includes allegations there were concerns about the legality of the source of GFG funds raised by the French government and that GFG did not respond to requests for information in order to meet anti-money laundering requirements.

For its part, Duffel, whose aluminium rolling mill was founded in 1946, insisted it would operate through the ownership of AIP.

“We are looking forward to proceed under the new ownership of AIP, which is committed to a sustainable future for our company,” said Duffel mill general manager Geert Vannuffelen.

“We are convinced of a good cooperation between both parties and we are positive about the first steps AIP has taken to further invest in our company, which demonstrates their engagement to reach the full potential of our plant.

Existing leadership team to stay

“AIP intends to continue to operate Aluminium Duffel together with the existing local leadership team, and does not anticipate any disruption to normal operations of the business, including for customers, suppliers and employees.

“AIP expects to provide additional capital to support the business going forward so that it can successfully execute on its business plan, including for working capital, continued employment and important capital investments.”

Separately, GFG, owners of the last aluminium smelter in the UK at Lochaber insists the operation “continues to perform strongly” despite severe economic headwinds.

The international conglomerate controlled by tycoon Sanjeev Gupta has faced crisis after crisis since the collapse last year of its lender Greensill Capital, which had had lent GFG as much as £3.5 billion.

Lochaber smelter
Inside the Lochaber smelter

The collapse prompted the Serious Fraud Office (SFO) to launch an investigation into “suspected fraud, fraudulent trading and money laundering” at GFG, raising concerns for the future of its 35,000-strong worldwide workforce, including 3,000 in the UK.

Alvance British Aluminium at Lochaber continues to perform strongly, notwithstanding the challenging energy prices, while the recycling and billet plant project is meeting all its milestones,” said an Alvance spokesperson.

Smelter is 90 years old

GFG Alliance, which acquired the 90-year-old smelter and its hydropower plant from mining giant Rio Tinto in a £330 million deal in 2016.

The 2016 deal was underwritten by a £586 million Scottish government guarantee to buy energy from the hydro plants.

The aluminium smelter uses hydro-electric power in its plant at the foot of Ben Nevis on the outskirts of Fort William.