Arrium’s steelworks, port and mining operations are now officially up for sale and have already attracted interest from potential buyers.
The company’s administrator, KordaMentha, says it’s turned its attention to either a recapitalisation or sale of the Arrium group.
“The Arrium group of companies are expected to attract genuine interest from numerous credible local and international parties, many of whom have already contacted KordaMentha to register their interest,” KordaMentha says.
The latest financial statements and budgets are being prepared now to allow due diligence by interested parties.
In the background, the South Australian government has been working on a rescue plan to keep the steelworks going. The latest economic modelling shows the loss of Arrium at Whyalla would cost the state economy $770 million and 5000 jobs, or about 6% of South Australia’s work force.
The administrator aims to start the sale process in late July and be largely completed by the end of this calendar year.
Arrium went into administration last month, a victim of falling iron ore prices and a steel glut caused by overproduction in China.
The iron ore miner and steel producer couldn’t get a deal with its lenders — the banks and note holders — to restructure debt of more than $2 billion. Australia’s major four banks have an almost $1 billion exposure to the debt.
Arrium, like many small iron ore producers, has seen its margins squeezed to nothing as the price of iron ore continues to fall on weakening demand for China where economic growth is slowing.
The assets up for sale include, the steelworks, port and mining operations, the grinding metal business Moly-Cop and OneSteel, a supplier of steel products in Australia.
A global investment bank will be appointed shortly to advise on the sale of Moly-Cop.