Arrium goes into administration after recap plan fails

PERTH (miningweekly.com) – ASX-listed Arrium has gone into voluntary administration after lenders this week rejected a recapitalisation plan.

Arrium told shareholders on Thursday that after considering the available alternatives, it had become clear that the company had no option other than to go into voluntary administration to protect the interest of stakeholders.

While Arrium in February secured $927-million in funding from GSO Capital Partners as part of attempts to restructure and level its debt in a low iron-ore price environment, the company’s lenders have voted against the recapitalisation plan.

Reports have surfaced that the lenders were angered by a lack of consultation from Arrium ahead of the February GSO Capital announcement.

Administrator Grant Thornton said on Thursday that Arrium would continue to trade on a ‘business as usual’ basis while the administrators undertook a comprehensive review of the company, to identify steps that could be taken to stabilise the Australian steel and mining businesses, with a possible restructure flagged.

Arrium’s overseas operations, including the Moly Corp business would be largely unaffected by the appointment of administrators, and would continue to operate as normally.

Minister for Industry, Innovation and Science Christopher Pyne said that the federal government was disappointed by Arrium’s decision to go into voluntary administration, but said that it remained hopeful that a positive outcome could be achieved.

“While we are advised by the administrators that it remains business as usual, the federal government stands ready to assist the workers of Whyalla,” Pyne said.

“The government, through jobactive, already has a range of support services available for workers who have recently lost their jobs from Arrium. Any additional assistance would build on these existing employment services.”

Arrium currently employs some 7 000 staff in Australia.