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Category: Business, Economics and Finance / Company News / Mining Industry

Arrium administrators say less than five possible bidders for miner

Friday, 4 Nov 2016 15:11:49 | Sue Lannin

Arrium says it will sell Moly Cop for over $1.6 billion to American Industrial Partners. (ABC News: Nick Harmsen)

The administrators of Arrium, Korda Mentha, say there are less than five possible bidders for the steelmaker and iron ore miner.

Korda Mentha said a handful of local and overseas firms have been shortlisted to buy Arrium with the sale hoped to be finalised by the end of January next year.

Arrium announced today it will sell its metal grinding subsidiary, Moly Cop, for just over $1.6 billion to US private equity firm, American Industrial Partners.

Moly Cop is not in administration and the proceeds will mostly go to Moly Cop's lenders, who are expected to get more than $0.50 in every $1 lent back.

Arrium administrator Mark Korda, said creditors voted today to go ahead with the sale of the steel and iron ore mining business but it could take some time.

"We've got a handful of bidders in the process. We think it'll be a due diligence process, so we are still two to three months go through that process. Its a big, large complex company," Mr Korda told the ABC in an interview.

Korda Mentha told a media briefing after today's creditor's meeting that the potential buyers included private equity.

Reuters reported yesterday that South Korean steel giant, POSCO, said it was not planning to buy Arrium despite statements from Federal Industry Minister Greg Hunt.

Mr Korda said the sales process was confidential and he could not comment on whether or not POSCO was a bidder.

Around 200 creditors attended today's meeting which was held in Sydney and also webcast in Whyalla, the site of Arrium's steelworks and port in South Australia.

They overwhelmingly approved the sale of Arrium despite opposition from some shareholders who have called for a refinancing deal instead.

Mr Korda said Moly Cop was sold for $300 to $400 million more than was offered last year.

"The sale of Moly Cop is a great step forward for all the creditors of Arrium," Mr Korda said.

Arrium was placed into voluntary administration in April with debts of around $4 billion amid acquisitions and the plunge in iron ore prices.

Approximately $2.8 billion is owed to Arrium's financiers, which include Australia's big four banks.

Mr Korda said that Arrium shareholders are unlikely to get any money back.

"Our estimate is there will be a shortfall to creditors and its unlikely there will be a return to shareholders unless there is a recapitalisation," Mr Korda said.

"Part of Arrium's demise was a high level of debt because of all the acquisitions it made," he said.

The administrators said the big increase in coking coal prices was having an impact on the cost of steel making and they were concerned that energy prices would rise following the planned closure of the Hazelwood power plant in Victoria.

AustraliaPlus


 

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