KordaMentha has taken over as Arrium's administrator

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KordaMentha has replaced Grant Thorton as the administrator of Arrium, a victim of falling iron ore prices and a steel glut caused by overproduction in China.

The change is the result of a deal between the banks and union representing workers on the site, but needed approval from the Federal Court.

The Australian Workers’ Union (AWU) was working with KordaMentha, which handled the collapse of Ansett in 2001 following a similar deal between unions and banks, in the lead up to Arrium’s slide into administration. But management pre-empted any move by its lenders to appoint their own administrator when the company handed the keys to Grant Thorton.

The iron ore miner and steel producer went into administration after it couldn’t get a deal with its lenders — the banks and note holders — to restructure debt.

A $US927 million recapitalisation plan by GSO Capital Partners was rejected by the existing lenders because it would have given the Blackstone subsidiary a 15% holding.

The union says the change in administrator was only made possible through the constructive and collaborative approach adopted by Arrium’s major institutional creditors and the AWU as the representative of Arrium’s employees.

“The AWU looks forward to working constructively with KordaMentha as the new administrator, engaging in a business-as-usual approach to Arrium’s operations, and ensuring we work in the interests of our members,” the union said in a statement.

The iron ore miner and steel producer went into administration after it couldn’t get a deal with its lenders — the banks and note holders — to restructure debt.

Australia’s four major banks are reported to be owed as much as $1 billion by Arrium from an overall debt of about $2.8 billion.

Arrium called in insolvency experts Grant Thornton as administrator last Thursday.

At stake is more than 8000 jobs across Australia and the Whyalla steelworks in South Australia where about 1000 work.

At the moment, the steel produced at the plant costs more to make than it can be sold for on the open market. The company had been looking at mothballing the plant if it couldn’t get an injection of capital and a round of cost cutting.

Across the company, about 300 employees went in the first half of the year and another 400 are due by the end of the financial year.

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