GFG Alliance has announced it will launch legal action against any attempts, made by US private equity fund AIP, to seize control of the Dunkirk aluminium smelter which is a part of the GFG’s ALVANCE business.
In July, earlier this year, AIP bought out a portion of the ALVANCE debts from its previous lenders. Early discussions also took place between GFG and AIP regarding a potential future sale of these assets but these discussions quickly ended due to certain concerns over the negotiations.
At the same time as ending negotiations with AIP in July 2021, GFG announced a full commercial arrangement between ALVANCE and a leading international metal market business. As part of this agreement, the international partner agreed to repay AIP in full and provide additional support for the ALVANCE business.
Despite this development, and approaches by GFG to repay AIP the debt it held, AIP took steps to acquire Dunkirk’s mezzanine debt in the secondary debt market. This was reportedly despite the fact the funds to repay AIP had been made available since July 2021.
AIP has declined repayment, third party debt purchases or third party refinancing from GFG.
GFG acquired the Dunkirk aluminium smelter in 2018 and integrated the business into ALVANCE creating a leading European integrated aluminium business. Since acquisition, GFG has invested over a US$100m in the development of the business, protecting nearly 1,000 jobs, and increasing EBIDTA threefold.
Commenting on GFG’s position, GFG Executive Chairman Sanjeev Gupta said,
“AIP have resisted all efforts by GFG to make full repayment of its debt, yet they claim GFG is in default. This is a cynical and predatory effort to try to acquire our business on the cheap. We will fight this with all of our efforts to ensure Dunkirk remains inside our international steel and aluminium group and is able to execute our long-term strategy, to the benefit of all of its stakeholders. Our employees, customers and suppliers deserve better and bolstered by our commercial deal with a market leading partner we remain committed to the reindustrialisation of France.”Sanjeev Gupta, GFG Executive Chairman
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