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Tear Sheet: Infrabuild EBITDA Leverage Likely To Peak At 4.9x in Fiscal ‘25 Amid Weak Earnings, Supplier Disruptions; GFG-linked Corporate Governance Risks Remain; Due ‘28s 800bps Wider Than Australia HY Despite Substantial Collateral Support

Credit Research: Rocky Andaya Relevant Document: Infrabuild Australia Pty Ltd 14.5% $200 million Due 2028 OM (Due ’28 OM)   Reorg Asia Highlights: Infrabuild Australia Pty Ltd is Australia’s only vertically integrated Electric Arc Furnace, or EAF, steel long products manufacturer and its largest producer and distributor of these products; Weak domestic residential construction and rising import competition led to revenue declines and significant margin compression in fiscal 2024 ending June 30. Management expects a nearly 50% year-over-year decline in reported EBITDA, resulting in a full-year loss. Operational disruptions at key supplier and related party Whyalla Steelworks will continue to weigh on earnings into the next fiscal year amid industry challenges; Reorg estimates that Adjusted EBITDA will fall short of management guidance in fiscal 2024, doubling total debt to EBITDA year over year to 4.4x, peaking at 4.9x in fiscal 2025. As our base case, this ratio is expected to decline to 3.9x in fiscal 2026, remaining significantly above prior levels; Corporate governance concerns persist due to Infrabuild’s 100% ownership by Sanjeev Gupta’s GFG Alliance. The company’s ties to the collapse of Greensill Capital and ongoing related-party transactions increase financial and operational uncertainties; Infrabuild’s $550 million 14.5% senior secured notes[...]