France economy

AIP buys Gupta’s aluminum smelter in Dunkirk after payment default

The GFG Alliance flag flies after a £ 330million deal to buy Britain’s last aluminum smelter at Fort William Lochaber, Scotland, Britain on December 19, 2016. REUTERS / Russell Cheyne / File Photo

LONDON, Oct. 1 (Reuters) – Buyout firm American Industrial Partners announced on Friday that it had acquired ownership of an aluminum smelter in France after the default on a GFG Alliance unit owned by the commodities mogul Sanjeev Gupta.

GFG, however, said it would fight against the takeover of the Dunkirk smelter, Europe’s largest primary aluminum producer.

GFG has been under pressure to find refinancing for its network of cash-strapped steel, aluminum and energy companies after supply chain finance firm Greensill filed for bankruptcy in March .

AIP said in a statement that the acquisition took place after the foreclosure of shares that had been pledged to AIP under mezzanine financing deals.

In July, GFG announced that it had reached an agreement with the commodities group Glencore (GLEN.L) to refinance the debt of its aluminum unit after the collapse of GFG’s main lender. Read more

GFG said in a statement that it had offered to repay the debt to AIP.

“AIP used his loan instead …

Glencore declined to comment.

AIP said the transfer of ownership was approved by French authorities and complied with European Union merger regulations.

“The purchase price (…) will be determined in due course by an independent valuation,” said his press release.

French economy and industry ministers said they welcomed the prospect of stable ownership and the AIP’s commitments to maintain capacity at Dunkirk.

“This development, if it were to be finalized, would allow a positive outcome for the company and all of its staff,” said Bruno Le Maire and Agnès Pannier-Runacher in a press release.

The AIP said it will continue to retain the foundry’s current leadership and that no disruption is expected.

“AIP expects to provide additional capital to support the business in the future,” he added.

The Dunkirk operation produced 284,000 tonnes of aluminum and employed 550 people in 2018. More recent data was not available.

Reporting by Eric Onstad, additional reporting by Gus Trompiz; Editing by Louise Heavens, William Maclean

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