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Category: Steel / Iron Ore / Company News / Banking

Arrium shares suspended ahead of lender announcement

Wednesday, 6 Apr 2016 08:41:24 | Michael Janda

Arrium's steelworks is losing vast amounts of money against cheaper imports. (ABC News: Michael Coggon)

Arrium has suspended its shares from quotation on the ASX ahead of an announcement by its lenders about the future of the troubled steelmaker and miner.

In a statement to the ASX, Arrium said it would soon make an announcement about the discussions with its lenders (a group of banks and noteholders) after their rejection of a recapitalisation plan floated by a US investment fund.

GSO Capital Partners was proposing to lend Arrium $924 million over six years, with Arrium shareholders to tip in a further $364 million.

The cash is needed to keep the struggling firm afloat amid large losses for both its steel and iron ore mining operations.

However, the deal was subject to approval from Arrium's lenders, and they were unhappy with various conditions and rejected the proposal.

The ABC understands that the lending syndicate to Arrium includes all four major banks, who are owed a total of approximately a billion dollars in roughly equal share.

Arrium chief financial officer resigns

Arrium said it expects to be able to make a further announcement about its discussions with lenders within a week.

In the interim Arrium noted that, "reinstatement of trading in its shares at this stage may be materially prejudicial to the outcome of those discussions and its ability to complete a recapitalisation or restructure which is critical to the company's continued financial viability."

The company has also announced the resignation of its chief financial officer (CFO), Robert Bakewell, who had been in the role since 2009.

Arrium's group financial controller Anthony Brooks is stepping up as the interim CFO, effective immediately.

'No point in criticising the banks'

Industry Minister Christopher Pyne told reporters in Adelaide that the Federal Government was making exceptional efforts to help facilitate a deal, with the Prime Minister getting involved.

"He personally made phone calls to the National Australia Bank and to the other banks to make that happen," he said.

However, Mr Pyne said Arrium's problems are management-related, not due to the behaviour of its lenders.

"There's no point in criticising the banks. The banks have a $2 billion outstanding debt that is owed to them by Arrium," he argued.

"If there's anybody who needs to look at themselves, it's the Arrium management, not the banks.

"But we want to work with the banks, we want them to be good citizens and they want to be good citizens.

"The best possible outcome is for Whyalla to help trade Arrium out of its problems ... if they can do that, it's good for the shareholders of the banks, it's good for Arrium and the workers at Whyalla and that is the outcome that we need, for the business to keep trading."

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