Liberty House said to bid for Arrium's assets

MELBOURNE – Liberty House Group is among bidders to have submitted an offer for the steel and iron-ore assets of Australia’s Arrium, according to people with knowledge of the process.

The London-based steelmaker and metals trader made a non-binding proposal, the people said, requesting anonymity as the details are private. Liberty House faces competition, including from private equity groups and entities with interest only in specific assets, two of the people said.

Liberty House declined to comment in an e-mailed statement. A representative of KordaMentha also declined to comment on details of the process.

Arrium, which appointed the administrator in April, has steel-making capacity of about 2.5-million metric tons a year. Operations include the Whyalla steelworks and port, the OneSteel steel manufacturing, distribution and recycling unit and an iron ore mining division, according to company filings. Binding offers are scheduled to be submitted in December and detailed due diligence materials are being prepared for bidders, KordaMentha said in an October 5 filing.

'STRONG PREFERENCE'
The administrator has “a strong preference for offers that will allow for the sale of the business in one line as a going concern,” it said. A separate process for a sale or an initial public offering is underway for Arrium’s mining consumables business, which has sites from Chile to Indonesia.

Liberty House was among bidders for Tata Steel’s UK operations and in March agreed to buy two Tata Steel mills in Scotland. The producer last month formally reopened the Dalzell works in Scotland and last year restarted operations at a rolling mill in Wales.

Global steel producers, including Arrium, have been pressured by rising exports from China, maker of half the world’s steel, which have weighed on prices and eroded profits. Arrium’s underlying net loss in the six months to December 31 widened to A$24-million ($18-million), from A$22-million a year earlier, the producer said in February. Lenders in April rejected the producer’s proposed $927-million recapitalisation plan.

Steel prices have improved in 2016 as global policy makers pledged to back growth, bolstering the outlook for producers. BlueScope Steel, Australia’s top steelmaker, more than doubled underlying profit in the year ended June 30, while ArcelorMittal, the world’s biggest producer, in July reported the highest quarterly profit since 2014.

Liberty House, with steel operations in the UK, Africa and India, is pursuing a strategy to acquire distressed assets and drive improvements by lowering energy costs and favoring scrap metal over iron ore, executive chairperson Sanjeev Gupta said in an April interview.