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Council CEO Chris Cowley meets with GFG Alliance

 

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ASSURANCE: Part of the letter to Council from GFG Alliance. Full letter published below

City of Whyalla CEO Chris Cowley has received assurances from GFG Alliance that it is addressing the perceived issue of slow payment to sub-contractors in Whyalla.

Following media reports this week of Whyalla companies “not being paid by GFG Alliance”, Mr Cowley met with senior GFG Alliance officials in Adelaide today to convey Council’s concerns on the issues, real or otherwise.

Mr Cowley said he was able to further explain the case of the sub contractors and the community to GFG Alliance and express the concerns from Council and the community.

“As a Council we understand the nature of big business and the situation GFG Alliance was in when it comes to taking over a big operation and putting a payment system in place,” Mr Cowley said.

“But the bottom line was that there are people in our community with real concerns and with real outstanding bills.

“It would be negligent, as a Council, if we didn’t talk to GFG Alliance and gain some assurances that the issues surrounding people in our community were being addressed.

“It says a lot about the strong relationship Council has with the owners of our steelworks and associated mines that they were more than happy to come to the table, explain the situation further and give a more detailed explanation to us and the community.

“The letter and assurances given to us, to pass on the community and sub-contractors involved, will go a long way towards putting people’s minds at rest.

“Council will continue to work closely with GFG Alliance on this matter.”

Attached is a copy of the resultant letter from GFG Alliance Executive Chairman Sanjeev Gupta to be passed on to the Whyalla community.

 

8 February 2019

To Whyalla City Council and the Whyalla Community,

GFG ALLIANCE AUSTRALIA TO ACCELERATE REFORM OF PAYMENTS SYSTEM AND FINANCING FACILITIES TO MEET SMALLER SUPPLIERS’ NEEDS

You may have noted that the GFG Alliance has recently been subject to some media reports focusing on our standard payment terms and concerns by suppliers in Whyalla over delayed payment.

I would like to take this opportunity to respond to these reports and explain what we are doing to resolve these issues. If you have been affected, I would also like to provide you with my reassurance that we are working through these issues as a matter of urgency.

GFG Alliance purchased the Arrium assets in September 2017. It is a complex business with many challenges that we continue to work through. Amongst other things, when we purchased the business, we inherited the standard terms and conditions that Arrium and the administrators had been dealing with vendors on. This included payment terms. We have not changed these payment terms.

We also inherited a working capital management system which was not fit for purpose. GFG Alliance began to upgrade these systems at the end of 2018 with the aim of replacing complex multiple treasury systems and payment terms inherited from Arrium, which are not suited to the needs of a fast-growing business such as Liberty. For background, we operate in over 200 locations, with 10 separate financial and treasury systems, one such area that is overloaded and inefficient is that of collections and payments management.

In order to fast-track the upgrade of our working capital management systems we have engaged additional consultancy resources to ensure, amongst other things, that all our small business vendors have appropriate payment terms.

In addition, the market in Australia has grown by 20% in the last 10 months, so we are also responding to that very fast growth rate. We have ramped up production to ensure Australian infrastructure and construction projects are supplied in time. That growth and demand is placing new stresses upon our working capital requirements, our working capital systems and our suppliers.

Responding to these issues and the impact of our growth on our suppliers we are in the process of working with Greensill, the world’s leading non-bank provider of supply chain finance to introduce a Supplier Credit Facility (SCF) by March. This facility will enable us to fast-track future payments, and also alleviate the impact of any increased demands on our suppliers and ensure they can grow with us.

The overall aim of the above initiatives is to improve our payment processes and terms, which will ensure that our suppliers continue to play a critical role in the long-term growth of our business.

I can assure you that we fully understand the feelings of those suppliers affected by the above issues and I am determined we will keep things on track so that we can grow together.

If you have any specific questions, please email whyallasuppliers@gfgalliance.com and we will do our best to address and clarify any matters arising.

Kind Regards

Sanjeev Gupta

Executive Chairman

GFG Alliance

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