(Bloomberg) — Embattled tycoon Sanjeev Gupta’s GFG Alliance has agreed a deal with Glencore Plc to refinance the group’s aluminum unit.

Glencore will provide a loan to acquire most of the outstanding debt of the Dunkirk smelter and the Duffel factory, repayable over six years, according to an internal GFG memo seen by Bloomberg. The trading house will also assist with hedging and marketing aluminum products from the unit, and Glencore, together with Trafigura Group, will supply the raw material requirements of the two plants.

The deal is a major step in Gupta’s battle to refinance his metals empire after the collapse of his main lender Greensill Capital in March, and reflects the current strength of the aluminum market. The metal is trading near a three-year high, buoyed by the global economy’s rebound from the Covid-19 pandemic. Yet Gupta still has to refinance massive debts on his European steel assets, which may prove a more difficult task.

Glencore has sought to buy about $230 million in Dunkirk debt from Trafigura and BlackRock Inc., according to people familiar with the matter, who asked not be identified as the information isn’t public. That doesn’t include some $210 million in Dunkirk and Duffel debt held by American Industrial Partners, which had been seeking to buy the assets. A person familiar with the matter said that Glencore’s exposure to GFG was not expected to exceed $340 million under the deal.

A spokeswoman for Trafigura confirmed the deal.

The accord is Glencore’s first since Gary Nagle last week succeeded Ivan Glasenberg as chief executive officer of the miner and trader. It gives the commodities giant a foothold in one of Europe’s key aluminum producers — but also puts it in partnership with GFG at a time when Gupta’s group is under investigation by the U.K.’s Serious Fraud Office for alleged fraud and money laundering.

Glencore itself is the focus of several multiyear corruption probes in the U.S., the U.K. and Switzerland.

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The deal is also unusual in that it involves Glencore and Trafigura working together, at least until Trafigura’s agreement to supply alumina to the Dunkirk smelter expires. The two merchants, which together dominate the metals market, have been bitter rivals since Trafigura was founded in 1993 by a splinter group of executives who had departed Marc Rich + Co., as Glencore was known at the time.

Glencore is the world’s top aluminum trader, but its aluminum unit — run by Robin Scheiner — has become less relevant to its overall profitability as the company has evolved from trading house to miner.

Meanwhile, Gupta has rejected an offer from AIP to buy the business, according to the memo. The offer would have seen Chief Investment Officer Jay Hambro depart for the private equity firm. Bloomberg News reported earlier this month that Hambro’s negotiation of the deal caused a rift between him and the Indian-born metals magnate, due to the low price offered by AIP.

It’s not clear whether AIP, which holds a sizable share of the senior debt of both Dunkirk and Duffel, has agreed to the refinancing deal. In the memo, Gupta said the group was “targeting an amicable settlement of their debts using the facilities agreed with Glencore.”

AIP didn’t immediately respond to an emailed request for comment.

(Updates with Glencore’s exposure in fourth paragraph.)

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