By Eric Onstad

LONDON (Reuters) -The GFG Alliance owned by tycoon Sanjeev Gupta said it had agreed a deal with commodities group Glencore (OTC:) to refinance the debt on its aluminium unit after GFG’s main lender collapsed in March.

GFG has been under pressure to find refinancing for its cash-starved web of businesses in steel, aluminium and energy after supply chain finance firm Greensill filed for insolvency.

Glencore would acquire most of the debt on GFG’s European aluminium smelters, which would be repackaged as a loan payable over six years, according to an internal note send to GFG staff on Friday and seen by Reuters.

Spokesmen for GFG Alliance and Glencore declined to comment.

The note did not say how much debt was being refinanced, but a source close to the deal said Glencore’s exposure would not be more than around $340 million.

As part of the deal, which was finalised on Thursday evening, commodity traders Glencore and Trafigura would supply raw materials to GFG’s aluminium business, the note added.

Trafigura said in an email: “This is the continuation of an existing arrangement to provide alumina into the Dunkirk smelter.”

Glencore would also help market production from the business, which includes Europe’s biggest aluminium smelter at Dunkirk, and provide hedging facilities, the note added.

“These agreements will help secure the working capital needs of the businesses and allow us to de-risk the business by capturing the current strong prices,” the GFG note said.

The note also said GFG had turned down an offer from AIP to buy its aluminium assets and was expecting to use the Glencore facilities to repay debt owned to AIP.

Media reports have said that in April buyout firm American Industrial Partners had bought the senior debt on GFG’s Dunkirk smelter and its Duffel rolling mill in Belgium.