The metals empire owned by the industrialist Sanjeev Gupta has said it has secured new financing for South Australia's Whyalla steelworks, potentially staving off a threat to thousands of jobs.
GFG Alliance on Wednesday said that Liberty Primary Metals Australia (LPMA) had agreed a deal to refinance loans previously extended by Greensill, the financial firm that collapsed into administration in March.
GFG, which employs about 35,000 people in metals companies stretching from Australia to the UK, said it could take up to four weeks for the deal to complete. It is understood that the deal, first reported by the Australian Financial Review, has been agreed with San Francisco-based White Oak Global Advisors.
If finalised, the refinancing would represent a significant boost for Gupta, who has been scrambling to find new backers since the Greensill collapse. Greensill had lent Gupta's companies as much as $5bn (£3.6bn), and its bank backers have petitioned to wind up various Liberty Steel companies in the UK and Australia.
The UK government has prepared a plan to take over Liberty Steel if it falls into administration, after turning down a plea for a £170m emergency loan because of concerns that the money would be shifted abroad via GFG's complex structure. The group of companies has also said that applications for various loans under coronavirus emergency schemes were lawful.
The deal announcement came ahead of a first court hearing on Thursday in a case brought by Credit Suisse in New South Wales to wind up a key part of the Gupta empire.
Credit Suisse, which was one of Greensill's major financiers, bought from Greensill debts it was owed by one of Gupta's Australian companies, Onesteel Manufacturing, which owns the Whyalla steel mill.
The amount in dispute is unclear, but Guardian Australia has previously reported that Gupta's Australian companies owed Greensill hundreds of millions of dollars.
It is likely the NSW supreme court will make orders to schedule further hearings in the case.
An administration would threaten the jobs of 1,500 workers at Whyalla, plus another 400 at a coking coalmine at Tahmoor, New South Wales.
A GFG spokesperson said: "The new financing is sufficient to pay out [LPMA's] Greensill debt in full and to provide ongoing working capital for the LPMA group, which includes the integrated mining and primary steel business at Whyalla and its coking coalmine at Tahmoor.
"GFG Alliance is in continuous discussions with multiple financiers on a competitive basis for various parts of its business and is committed to securing sustainable funding solutions to replace funding provided by Greensill."
The Whyalla mining and steel operation is one of the more financially secure parts of Liberty Steel. However, serious questions remain over the future of the UK arm of the business, which has been hit hard by the slump in aerospace manufacturing caused by the pandemic. Liberty Steel employs about 3,000 people in the UK, while there are about 35,000 workers in GFG Alliance worldwide.
GFG's UK operations range from 11 steelworks plants across Great Britain, including at Stocksbridge and Rotherham in South Yorkshire, to an energy company and an aluminium smelter in Scotland.
The deal was welcomed by unions representing Australian and UK workers.
The Australian Workers Union's national secretary, Daniel Walton, said it was "vindication and relief for thousands of Australian workers".
Alasdair McDiarmid, operations director at the steelworkers' union Community, said: "The development shows that GFG can raise new financing, but it remains to be seen what it means for the UK. Sanjeev Gupta has promised to keep every UK steel plant open but he needs to persuade us he has the plans to accomplish this. Government has a key role to play and must explore all options to keep the businesses out of insolvency."
The Australian refinancing was thought to be significantly more advanced than talks about the struggling British businesses.
The Greensill collapse has also prompted a lobbying scandal in the UK after the former prime minister David Cameron was revealed to have pushed for access for the firm to emergency coronavirus loan schemes.
White Oak has been approached for comment.