Some interesting posts & thoughts today - but I'm not so sure its all over yet. Strongly agree with returnofthemac's post re Exec Management & Board - they have showed woeful leadership in terms of sharing any of the pain with all various stakeholders, and even worse investor relations and stakeholder engagement skills - worst I've ever witnessed by far...
HOWEVER while things are very precarious, I think some posters could be premature on certainty of insolvency. Arrium has some quality assets in the fold, and with the long Moly Sales/DD process that's already been run & Arrium's well published issues - many potential acquirers / suitors for some/all of Arrium would be well-advanced in their DD if decide to make a move.
The behaviour of management has been bizzare, and I suspect it is actually a deliberate tactic to force lenders to engage &/or flush any other potential suitors out of the woodwork - using a GSO imposed deadline (& very shitty deal for lenders & shareholders!) to get everyone's minds focused and motivated to negotiate. To that end it has certainly been successful!
Next 2 weeks will be key for any Chess moves on market &/or behind doors with debt/lenders direct. I suspect Arrium is far more valuable as a going concern than in liquidation, and a recapitalisation of some sort (and ideally change of leadership) should provide good chance to trade out of troubles.
I understand Iron Ore's most onerous contracts expire this September, then Arrium can renegotiate on far better terms or put IO mines on care and maintenance - either way a win. Contractors know this is coming, if they're smart they'll show a willingness to negotiate now, in return for contract extension.
Whyalla guys know how serious situation is, but have every right to press management for details/a plan forward ("Communicate you arrogant men - when will this sink in!??!) Don't believe GSO deal will see the light of day in the end - just a question of what it ends up being replaced with. Lenders can surely do better than this woeful deal, hopefully shareholders too in a deal structured to keep them involved (I would happily tip in capital at these levels for fresh leadership & vision). Suspect the above is what management are really trying to flush out, and they see $20M break fee as a reasonable price for a successful outcome.
Fingers crossed we see a cornerstone investor with financial saviness to replace the current captain and his motley crue, and steer us to calmer waters...
High risk, but I haven't waited this long to bail out at five minutes to midnight. Will see where ship goes or go down with the ship!
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