Whyalla steelworks creditor NRW claims GFG would have coughed up $70 million before Government takeover

A major creditor of the collapsed Whyalla steelworks has argued it would have been paid $70 million by Sanjeev Gutpa’s GFG Alliance had the South Australian Government not “intervened”. Shares in Perth contractor NRW crumbled 10.2 per cent on Monday after resuming trade following a week-long halt spent finalising the financial fallout from its involvement in the collapse of Whyalla Steelworks late last month. On a call with analysts on Monday, NRW chief executive Jules Pemberton said there had been about 600 staff servicing the South Australian iron ore mines before OneSteel Manufacturing was put into administration, and there were now about 300 following redundancies. It comes as the Australian Financial Review reports that creditors are owed up to $1.35 billion and that the steel mill is losing about $1.5 million a day. Mr Pemberton revealed further details leading up to the contractor’s decision to stop working at the site in November, claiming OneSteel fell behind on its payments in August and September. NRW agreed to resume work in early December after Sanjiv Gupta’s global metals business GFG Group secured new debt for Whyalla, reportedly from a global credit fund and worth $150 million. That was enough to assure the contractor it would see the money it was owed and continue working. “He (Mr Gupta) announced that he was raising $US100 million from a very credible global fund who we have spoken to. Hence I knew it was credible, and unfortunately, some of that timing slipped, but we were promised $70 million given where our receivable was, it was part of the condition to continue,” Mr Pemberton said. “It’s a pre-administration event, which had it worked in timing, or had the government not stepped in, our exposure would have been $70 million less.” He later in the call said NRW “didn’t expect the government to intervene as they have.” Financials for the half-year provided to the market on Friday showed NRW had started demanding weekly repayments from the company as a condition to continue working at the site. NRW is owed more than $113m as of February when KordaMentha was called in to run Whyalla. The contractor has continued to provide services to the operation on the guarantee from administrators that it will get paid for the work it does from here on out. Mr Pemberton rebuffed concerns from one analyst questioning whether it was worth the contractor’s while to stay on the project, given the uncertainty surrounding its future. “There is zero risk, once an administrator is in place, to being paid post administration. They are being funded by the State government and the Federal government, so they’re on the hook for making sure [of] those payments,” Mr Pemberton said. “There is no risk in that receivable at all going forward. Where we are working to recover is the receivable prior to the administration, which is the bit that we’re focusing on.” Mr Pemberton declined to share further details on how NRW might claw back the cash it was owed, but indicated that direct financial support from the State and Federal governments following the collapse was unclear at this stage. Shortly after administrators were called in the Federal Government pledged up to $2.4 billion in financial support. Of that, $50 million has been set aside in creditor assistance payments. But Mr Pemberton suggested this was for creditors owed “up to $5m” - indicating NRW’s $113m outstanding receivables would not be included. The South Australian government seized the financially struggling operations from Mr Gupta on February 20, putting them in control of insolvency experts from KordaMentha, after pushing through legislation allowing it to act on hundreds of millions of dollars in debts owed by Mr Gupta’s GFG Alliance.