Lenders Last Chance to Save "The Scalping", page-16

Between now and April 1st -Fools day

What I would expect to happen - only because it has happened recently elsewhere in the steel industry.

a/Workers,

1/Expect ARI miners to accept the 10% plus pay cut tied to a return of IO price to a profitable level of say $65/ton.-No job guarantee and job losses due to changes in work practices etc.

2/Expect Whyalla to do much the same 10% or so -along with numerous job cuts and restructuring of work practices to allow greater efficiency. a $AU raw steel price base set for the return of wages.
A structural change to the contracts allowing management control of the business-no guarantees of restricted work practices or conditions from one contract to another-refer BSL deal

b/Local Governments NSW and VIC - all self interest

1/States of Victoria and NSW to lift the maximum licensed capacity of ARI Arc furnaces in their states to provide insurance for themselves of reliable re-bar quality and supply no matter what happens.(Also increases ARI profitability at these plants with current low scrap prices - NOW).
Also needed if Whyalla blast furnace rebuild should ever occur.

c/Local Government SA - between a rock and a hard place

1/Local Govt to assist with local Steel mill payroll taxes -deferral and long term payback to ensure the State still receives cash in the end.Similar to NSW deal.

2/Lifting of royalties temporarily on all IO mined until it reaches a certain market value where profits for all are guaranteed i.e .$US70

d/Federal Govt.-Highly Embarrassed could have saved the day for steel 2 years ago with effective anti-dumping

1/Commitment to faster and more robust anti-dumping regime.Possibly a penal regime for circumvention e.g. US 256% tarrif where proven.e.g. Chinese subsidized Boron addition so imports could be called SPECIAL steel grades by importers and avoid existing tarrifs.

2/ Assistance on the basis ARI retain Blast furnace capacity of at least 1MT for say another 10yrs.Not necessarily rebuild the blast furnace but ensure blast furnace production is retained for that period.Repayable -Pro Rata if this does not eventuate.i.e. blast furnace lasts 7yrs -pay back 30%.
That does not alter the dynamics or economics of business decisions to be made by ARI(read lower the businesses value to whoever owns it).

LENDERS -If A+B+C+D= business value  = decision to support existing ARI BOARD or not.
ARI - If A + B + C + D = Profitable business structure ongoing = shareholder value = with banks assistance =No deal involving lender scalping.

DYOR + DYODD Everyone will want a better deal than that done by BSL.
So ARI may get more and those giving concessions may get a tighter level on claw backs.
If any one is dumb enough to be intrasient, then all will pay the ultimate price.
IMHO The colours just represent the emotions involved.

Mr.J Maycock has either played a very skill full game in the background to date or leads the worst board strategy I have ever seen.
Churchill or Mussolini in control??? Staring to wonder if ARI's a buy again????
Certainly time has been bought with the restructuring and with ARI seeking expressions of interest for MOLY-COP dragging on for as long as they could.
What didn't occur was an improvement in trading conditions -steel should have been making a killing but for GOVT's in action over dumping.
Now a restructuring proposal means the board have every reason to expect ARI to survive whatever the outcome with funds to meet its immediate needs,even if currently trading at a loss.
So more time has been bought.
JUST.