A Higher Offer for Molcycop

GSO/Blackstone deal dilutes and wipes out existing shareholders?

Andrew Roberts in his update this week says this is the best option the board has?

Shows the boards further contempt for the very people who are paying these bums to manage and grow Arrium - the shareholders.

Have no doubt the banks will reject this deal. Only hope now for us shareholders is if Ceberus or Blackstone come in at the last hour (before April 5th) and make an offer for what it is worth.

Arrium paid a P/E of 9.2 for Molycop 5 or 6 years ago, so assuming a lower multiple, you get say 8.4 x $255 EBIT (for 2015/2016 fin year) = $2,142 million. Take out investment banking fees of say 3% of value and you get net cash of $2,077.  It would be too risky for either company to buy all of Arrium.

Enough to clear the debts and recover with only Steel (EBIT of $200 million per year if Whyalla can get to breakeven) and iron ore (assume breakeven price of US$US45 delivered to port in China = EBIT of $0) and scrap recycling (EBIT of $0).  Steel prices have also shot of 40% in the past 6 weeks in China (slab steel and rebar) and iron ore now at US$57 per tonne for 62% FE content. So these figures could even be conservative.

Come on Cerberus or Blackstone - make the bid for what it is worth? And if financing is an issue, the banks owed money by Arrium should stump up a higher loan amount - that way they get the current debt owed to them paid out and they are now owed money by either a Cerberus or Blackstone against a far less riskier asset in the form of Molycop instead of Iron Mines, Coal Mines or Copper Mines, or even Residential Property - aren't these prices overinflated at the moment - esp. in Sydney and Melbourne.

There's always hope, and a win/win for everyone and especially shareholders - banks can provide along with Government some small loans to remaining businesses for working capital.

Possibly the best and also the last chance for shareholders who have been treated with contempt by this board - and if they survive to fight another day and share price recovers to 10 cents or so, come November, the shareholders should vote this bastards out and spill the entire board - shareholder democracy and activism at work!