As KM said recently, Arrium is a $5 billion company with about...

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maybeadog

456 Posts.

27/04/16

21:00

Post #: 17614024
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Originally posted by Boges ↑

Consider this possible outcome:

1) Whyalla Steelworks will be given money by Federal Government to modernise i.e. put in a rolling mill to produce the special steel required for Submarines, Future Frigates and OPV (Say A$50 million to $60 million). This will be sold as necessary from a defence perspective. Whyalla then sold off separately for a sum of money of $1 and an assumed debt level of say $100 million to $200 million. Deal to keep the plant running for at least another 8 to 10 years. A deal done to supply it with iron ore.

2) Arrium left with Molycop, 2 mini mills, scrap metal and iron ore mines (producing 8.5 million tonnes per year which with poorly signed shipping contracts expiring could have break-even cost lowered to US$38 or even US$36. New tariffs and import duties imposed by Anti-Dumping Commission (and Federal Government) also should boost EBIT in 2016/2017 year up to around A$450 to $470 million. Also, carried forward tax losses of around $2 Billion means no tax would be payable on EBIT for around 5 years - i.e. tax free for new buyer.

3) Articles indicating some foreign companies may be interested in taking over Arrium. Deal may involve paying out the lenders 80 cents or even 85 cents in the dollar. This could be arrived at via DOCA. Only takes 75% of lenders to agree to it and the 25% minority must grin and cop it. And Aussie banks will be happy to get out of it with Whyalla and the rest of Arrium being open for business as it means less losses that would occur if it went bankrupt in 1/7/2016 which it may do as debts are due in July and August 2017 of around A$800 million - which ARI will struggle to have.

4) Arrium then comes out of trading halt and Arrium shareholders receive something for their equity - board has an obligation to maximise takeover price? 6 cents ($180 million), 9 cents ($270 million), 12 cents ($360 million) or 15 cents ($450 million) - And possible bidders - Nippon Steel (Japan), Posco Steel (South Korea) or Brookfield and not the private equity firms and Vulture funds. A serious player who will run it as a long term viable business.

Rest assured if shareholders do not get any return or we are wiped out via a debt for equity swap in the form of lenders converting their written off debt into equity, there will be hell to pay for Directors of Arrium for all of this - i.e. CLASS ACTION LAWSUIT.

Like to know H.C users thoughts on this possible outcome?????

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As KM said recently, Arrium is a $5 billion company with about $4 billion of debt. Shareholders shall get something, the question is how much ... KM has legal responsibility to all stakeholders which imo includes shareholders.
An Administrator's main aim is to maximise returns to creditors, and even when this is done for Arrium's creditors, there is plenty left over for shareholders as owners...

ARI Price at posting: 2.2¢ Sentiment: None Disclosure: Held
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