KordaMentha launches legal bid to force Whyalla control from GFG Alliance
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The news: KordaMentha, currently operating the Whyalla steelworks have launched legal action against Sanjeev Gupta’s GFG Alliance, as the administrator struggles to wrest control of the port from its previous owner.
The context: KordaMentha were appointed to run operations at the steelworks after OneSteel, the GFG subsidiary which ran the steelworks, was placed into administration by the South Australian government in February. KordaMentha served another GFG subsidiary, Whyalla Ports, with a notice of termination of its lease over the port facilities in March, which was rejected. The administrators are now seeking urgent relief from the court to declare the lease void.
An affidavit filed by Michael Korda with the Federal Court reads that the dispute must be resolved urgently in order for a sales process at the steelworks to begin, as the steelworks is bleeding money at a cost of $1 million every day.
Korda’s affidavit says that the failure to hand over control of the port may lead to a permanent shutdown of the facility. “The sale or recapitalisation process needs to commence in the near term and must be completed as soon as possible because of the quantum of the current daily losses, the limited funding of the administrators, and the anxiety and hardship that the uncertainty is causing…employees, contractors, suppliers, and the township of Whyalla,” he wrote.
“If the administrators run out of funding or the sale and recapitalisation process cannot be undertaken before that time, or the sale process fails because of an inability to pass title to key assets, or it is otherwise unsuccessful, then OneSteel’s operations may need to close down.”
In February, administrators were given an immediate $100 million for in what the SA government called “immediate, on-the-ground support” to prop up the steelworks, including creditor assistance payments and infrastructure upgrades, and another $384 million was allocated to fund it during administration. The funding is being split between the Commonwealth and state governments.
The court has made orders for the parties to mediate, listing the matter for hearing on 5 May.
The sources: ABC , AFR, The Australian
