ASU DOCA for the record

For the record, a draft DOCA letter by ASU sent to KM few weeks ago and was rejected due to compliance and formality reason...

We, the ASU group, have consulted with legal practitioners to discuss the options available to us as shareholders. One of the viable options that we are keen to pursue is to propose a Deed of Company Arrangement (DOCA) tabled for consideration by the creditors as an alternative to the sales (or liquidation) of the remaining Arrium Australia assets including the steelworks, mining and recycling businesses.

According to Whyalle News (http://www.whyallanewsonline.com.au/story/4108651/focus-on-nyrstar-model/),

Industrial Minister Greg Hunt said the following in relation to supporting Arrium

“What we’ve always looked at is the best way to support that using the Nyrstar model, what happened at Nyrstar is potentially a great model of underwriting coupled with the export finance insurance corporation.”

We strongly believe that State and Federal governments support is the cornerstone for a credible DOCA proposal along with the participation from the unions, workers, suppliers and creditors.

With the above in mind, we have drafted the DOCA containing the following key elements:

- Sell/IPO the Mining Consumable sudsidary Molycop. All the proceeds received will be used to pay off debts minus the working capital required to run remaining Arrium Australia
- Return Arrium Australia to the board nominated by unions, governments, lenders and shareholders and arrange a repayment plan to repay the remaining balance of the debts over time
- No dividends will be declared until the debts are fully repaid or to an agreeable level
All remaining debts will be secured over Arrium Australia Assets including the steelworks, mine and ports
- Keep the Whyalla plant and operations continuously open
- Seek South Australia Government and Federal Governments funding/guarantee funding similar to the Nyrstar model used in Port Pirie for capital expenditure to upgrade the Whyalla Steelworks
- Invite a governments appointed independent director to the board
- Invite a lenders appointed independent director to the board
- Invite a unions appointed independent director to the board

The essence of the DOCA proposal has taken all the key stakeholders' position into considerations:

Secured Creditors
- All debts will be repaid in FULL (No losses in debts)

Unsecured Creditors
- Short term debts will be repaid in FULL and Long term debts will be repaid over an agreeable terms coming from the trading profit (No losses in debts)

Unions and Workers
- Whyalla plant will continue operations and jobs will be saved

South Australia Government
- Economic impact to Whyalla and the associated social issues will be averted and the government will be playing an active role in the company

Federal Government
- Saving from the potential tax liabilities arising from liquidation of the existing shareholders' investment in Arrium

- Saving from the massive social and economic cost associated to surge in unemployment

- Keeping the important structural steel industry in Australian hands

Shareholders
- Be able to keep the values of their investment in this great Australian company and will be actively working with other stakeholders to choose a capable board of directors to safeguard the future of the company.

We urge you to seriously consider this proposal and we are ready to be working with you to discuss the details of the proposal further.

Arrium Shareholders United