Lochaber Smelter’s crisis-hit owner, GFG Alliance, has announced it is close to sealing a deal that will refinance the debt of its Alvance aluminium division and allow its creditors to be repaid.
The metals group said it expected an agreement with “two of the largest trading houses in the world” to be finalised shortly.
GFG, which owns Liberty Steel Group, and is headed by metals entrepreneur Sanjeev Gupta, is undergoing a major restructuring following the collapse of its major backer, Greensill Capital.
In addition to the Fort William plant and its associated hydro power schemes, GFG’s Paris-based Alvance wing owns smelters at Dunkirk, in France, and Duffel, in Belgium.
Deal involves two of ‘world’s largest trading houses’
A statement issued by GFG’s Restructuring and Transformation Committee (RTC) said: “At Alvance, a strategic deal cementing a long-term commercial relationship with two of the largest trading houses in the world, has been agreed.
“The deal involves the supply of the raw material requirements of Dunkirk and Duffel, assistance in the marketing of products and provision of hedging facilities.
Under the agreement Alvance’s debt will be refinanced allowing creditors to be repaid. GFG expects the agreement to be finalised shortly once the reservations of one of the businesses’ creditors over early repayment has been resolved.”
The company also announced it had settled a “post completion dispute” over its 2018 acquisition of the Dunkirk smelter with Rio Tinto Group, from which it also bought the Fort William facility in 2016.
Last month GFG said it had regained control of its majority stake in tidal power developer Simec Atlantis Energy (SAE), which owns the MeyGen project in the Pentland Firth.
The group had launched a legal challenge after receivers were appointed in the British Virgin Islands, where its Simec UK Energy Holdings (SUEH) company, which owns 41% of SAE, is registered.
The update from GFG’s restructuring committee hailed a “strong performance” by the group’s core businesses, “bolstered by strong demand and record prices for steel, iron ore and aluminium in global markets, alongside improvements in systems and operations.”
Mrs Gupta said: “The update of the RTC shows that, despite the challenges, our core businesses continue to perform very well, and we are taking advantage of the excellent market conditions we face.
“Much remains to be done, but we believe that we are now making rapid progress in building faith with our creditors and other stakeholders through our restructuring plan.
“We are moving with significant momentum towards a profitable, restructured and focused business capable of delivering our Greensteel vision and strong returns.”
The probe will include the group’s multi-billion pound financing arrangements with Greensill.