InfraBuild has told investors it does not believe it is a target of these investigations.
Investors have long seen InfraBuild as one of GFG’s stronger businesses – and unlike many other companies in the group it has its accounts audited by a big four firm – but several investors told the Financial Times they were unwilling to lend to the company.
“The underlying business is not horrible, it’s just I don’t want to walk into the office one day and have the wrong kind of headlines,” said one New York-based bond fund manager. “It’s just not worth my time.”
GFG said: “InfraBuild continues to perform strongly and has secured the backing of top-tier investors for its growth plans.”
InfraBuild did recently secure a $US350 million ($537 million) asset-backed loan from US funds BlackRock and Silver Point.
A new bond deal would be used to refinance InfraBuild’s outstanding $US325 million bond and also to raise money for a potential acquisition of Mr Gupta’s US steel business.
This deal would also release money for Mr Gupta to repay some of the billions of dollars still owed to Greensill Capital investors who bought packaged up loans to his companies, according to two people familiar with the plans.
It would not be the first time InfraBuild has purchased assets from its owner, having bought smaller metal recycling businesses in the US and Poland from Mr Gupta in 2021.
InfraBuild’s first bond offering in 2019 struggled to attract demand. Even after the company scaled back the bond by one-third to $US325 million, the company had to offer a 12 per cent interest rate to attract investors.
While that deal allowed InfraBuild to move away from using financing from Greensill, weeks before Greensill collapsed it filed documents indicating that it had taken security over InfraBuild’s entire share capital.
GFG told the Financial Times that this share security was “disputed and has no legal basis”, however, because it was conditional on Greensill advancing “substantial facilities” that “did not materialise”.
InfraBuild transactions with other companies in Mr Gupta’s wider group – for example, purchasing steel billets from the Whyalla Steel Works – and its accounts for the year ending June 2022 show that it booked $612 million of purchases from, and $78 million of sales to, related parties.
Mr Gupta’s use of related party transactions has drawn scrutiny elsewhere. The Bank of England censured his UK lender Wyelands Bank for “wide-ranging significant regulatory failings” earlier this year after an investigation of the bank’s extensive lending to Gupta’s companies.
Financial Times