KordaMentha says no break-up of Arrium as Morgan Stanley hired...

KordaMentha says no break-up of Arrium as Morgan Stanley hired
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KordaMentha's Mark Korda says investment bank Morgan Stanley has been instructed to sell Arrium's Australian assets in one lot. Robert Shakespeare
The administrators of the Whyalla steelworks and the other Australian assets inside the collapsed Arrium have instructed investment bank Morgan Stanley to sell the operations in one lot and avoid a break-up of the group, which may have otherwise led to thousands of job losses.
KordaMentha Restructuring partner Mark Korda told The Australian Financial Review on Friday there would be no piecemeal sale of the Australian assets and all the local operations would sit under the same roof in a sale process, to maximise returns to creditors and save as many jobs as possible.
"The sale process is as a going concern," Mr Korda said, adding there would be no cherry-picking of the better assets.
Separately, unions and the administrator have finished negotiations for a proposed pay cut for the Whyalla workforce of 10 per cent to save around $17 million. But workers still need to vote on the deal for it to be ratified. KordaMentha had originally proposed a pay cut of 12 per cent, while unions only wanted 7.5 per cent. They have thrashed out a compromise of 10 per cent pay cuts but with a 2 per cent pay rise in each of year three and year four of an agreement.

On the asset sale process, Mr Korda said there had already been healthy levels of preliminary interest.

"We think there will be global interest from trade buyers, strategic buyers and private equity," he said.
There is also heavy political pressure from both the federal government led by Prime Minister Malcolm Turnbull and the South Australian government led by Premier Jay Weatherill to keep the Whyalla steelworks operating because a shutdown would trigger the loss of 3100 jobs in the steel town of 23,000 people, which is about 380 kilometres north-west of Adelaide.
Workers to vote

Arrium's east coast steel business is one of the more sought after businesses in Arrium. Up for sale are businesses including the OneSteel Metalcentre operations, the Australian Reinforcing Company and OneSteel Reinforcing. Along with the Whyalla steelworks, the administrators are also still operating a nearby iron ore mining operation in the Middleback Ranges.
Mr Korda said global conditions were improving, with steel prices rising and iron ore prices up solidly. "It's fair to say that everything at a macro level is going in the right direction," he said.
KordaMentha has cut costs at the Whyalla steel business by close to $300 million, with a further reduction to come through wage cuts for the workforce which are close to being finalised.
Morgan Stanley has been officially appointed to commence the sale of the Australian assets, several weeks after Deutsche Bank began a separate process to either sell or float the $1.5 billion Moly-Cop mining consumables and steel grinding ball business, which is also owned by Arrium but has been excluded from the formal administration process.

Mr Korda said keeping the Australian assets under one roof would maximise the sale proceeds to creditors and help save jobs.
"We think they are compatible," he said. "One of the objectives of administration is to ensure that as much of the business can continue as a going concern."
There has been speculation that New York private equity firm Argand Partners has been eyeing the assets, along with Korea's Posco.
The federal government has given the administrators a loan of $49 million to buy new equipment for the mining operations to improve efficiency, while the South Australian government has offered $50 million in cash for any new owner to spend on upgrading the Whyalla steelworks.