Arrium shares have been in a trading halt since Monday, after its lenders rejected the South Australian firm’s recapitalisation plan. The company told the ASX it expects to make a further announcement about its discussions with lenders within a week.

The news has caused the South Australian Treasurer Tom Koustantonis to attempt to calm nerves, particularly in Whyalla where the axe hangs over the Arrium steelworks and the jobs of more than 1000 workers.

Arrium’s lenders – which include Australia’s four major banks, several global banks and US bond holders – this week rejected a rescue package from asset manager GSO Capital Partners that would have involved them taking a sharp haircut on their debt.

The banks have instead pushed the struggling company to go into voluntary administration, with the administrator to be handpicked by the lenders, the Australian Financial Review newspaper has reported. Arrium’s directors have also offered to resign, the paper said on Wednesday.

A company spokesman declined to comment on the media reports.

Koutsantonis, who flew to Whyalla today, said voluntary administration was not a good option, stressing that the decision to suspend trading was “no reason for anyone to panic”.

“What this decision today gives us is the opportunity for the banks, Arrium, the Commonwealth Government and the State Government to be at the table and be able to come up with a solution,” he said.

“The State Government wants everyone involved here to take a breath.”

He said he wants a long-term plan to ensure Arrium’s survival, which was crucial to Australia’s national sovereignty, particularly the nation’s capacity to produce structural steel in times of emergency.

The State Government had been in late night discussions with Arrium and the banks, and Koutsantonis warned against the lenders forcing the company into voluntary administration.

“If Arrium goes into voluntary administration it will be because the Australian banks have pushed them there,” he said.

He said voluntary administration wouldn’t be a disaster but could cause “unforeseen outcomes” that wouldn’t serve any party’s interests.

The Treasurer wanted Arrium to trade its way out of trouble, with support from the state and commonwealth governments, but also NSW and Victoria where the company also employs people.

Federal industry minister Christopher Pyne said the management of Arrium was to blame for putting the jobs of its 7000 Australian employees at risk.

Pyne said was unfair to criticise the company’s lenders for Arrium’s financial woes.

“If there is anybody that needs to look at themselves, it’s the Arrium management, not the banks,” he told reporters.

Local MP Eddie Hughes said it would be a disaster if the steelworks closed and there was a limit to the resilience of the local community.

The Australian Workers’ Union told a Senate committee hearing in Whyalla yesterday that homeowners in Whyalla were selling up amid concerns job losses at the local steelworks could drive higher crime and drug abuse.

The union said more than 600 homes have already been put on the market following news that Arrium was considering mothballing its South Australian operations.

“Nobody wants to buy into a town that hasn’t got a future,” a union spokesman told the hearing in Whyalla on Tuesday.

“There’s people that have just invested in housing, young families that have had a job at the steelworks or the mine, that are contemplating selling it or giving it back to the bank.”

The value of the local property market had fallen from $2.7 billion to about $1.5 billion in recent years, Whyalla acting mayor Tom Antonio told the committee.

Earlier, hundreds of steelworkers and their families marched the streets of Whyalla, chanting “save our steel”.

Addressing the rally, independent senator Nick Xenophon said the NSW state government should be ashamed of themselves for importing Spanish steel rather than using local materials.

“Whyalla is at five minutes to midnight,” he said.

“This is about a battle for Australian manufacturing. If Whyalla doesn’t make steel then this country’s not going to be making much at all in years to come.”

There are fears jobs at Arrium’s mining operations in Whyalla could be under immediate threat after some workers voted not to take a pay cut to help the embattled company.

The steelmaker, which is grappling with growing debt and low iron ore prices, has said it needs to find $60 million in savings to continue operating the Whyalla steelworks.

Whyalla’s steelworks.

Meanwhile, building products group Brickworks has appointed Robert Bakewell, Arrium’s chief financial officer, as its new money boss.

Bakewell is a finance and commercial executive with more than 20 years experience in listed Australian and international industrial companies. He has experience in mergers and acquisitions, restructuring, balance sheet and capital management and investor relations, Brickworks said in a statement on Wednesday.

Bakewell, who starts on June 1, will take over from Alex Payne.

Payne, who has been Brickworks’ CFO for the past 13 years, will retire in September.

When asked about Bakewell’s resignation today, Kourstantonis said it wouldn’t impact negatively on the banks’ decision-making on Arrium.

“I think you’ll find the banks are quite happy with that,” he said.

– David Washington with AAP