Arrium says it will update the market on the recapitalisation of the company and its talks with lenders after the lenders rejected a recapitalisation plan involving GSO Capital Partners.
The miner’s shares, which last traded at 2.2 cents, will remain in a halt until the start of trading on April 6, or when the announcement is made to the market – whichever is earlier.
The trading halt will have nerves jangling in Whyalla, where Arrium’s more than 1000 steelworkers face an uncertain future. Arrium employs thousands of other workers in its mining operations – a total of 7,000 across Australia and 22,000 internationally.
Tomorrow was the deadline for Arrium’s lenders to accept the proposed $1.2 billion lifeline from GSO.
However, in an announcement to the ASX today, Arrium confirmed its lenders had rejected the GSO overture.
The threat of closure, or “mothballing”, has hung over Arrium’s Whyalla steelworks with a $100m cost cutting plan launched last year, resulting it the loss of hundreds of permanent jobs and contracting positions.
In February Arrium announced during its half-year financial results that a further $60m gap had been found. Arrium workers are deciding this week whether to take a pay cut to help breach the gap.
In early March, Prime Minister Malcolm Turnbull visited Whyalla, gifting Arrium a contract to supply steel for a 600km rail upgrade in regional South Australia.
South Australian mining minister and Treasurer Tom Koutsantonis said today that Arrium’s future was “still to be decided”.
Indicating the State Government knew about the rejection of the GSO bailout ahead of the ASX announcement, Koutsantonis revealed that Premier Jay Weatherill had spoken to Prime Minister Malcolm Turnbull on the weekend to “update him on the situation”.
“They agreed that the principal objective is the continuity of the business operations at Whyalla,” he said.
The government’s steel task force was speaking to all parties in the negotiations about the company’s future.
“The future of Arrium is still to be decided. The company, its creditors and potential financiers are still locked in negotiations to resolve the company’s financial situation.”
He said the situation was “complicated” and there was no simple answer to the challenges facing Arrium.
“There is a lot at stake here for South Australia an indeed the nation. Our nation’s sovereignty relies on Australia continuing to produce its own steel.”
Koutsantonis said the government had spoken to the banks that were Arrium’s lenders and that while the banks were right to consider their balance sheets, they also had to consider the “national interest”.
“Our banks are the most profitable in the world,” he said.
It would be “ridiculous” if Arrium closed and Australia was forced to import its steel.
He reiterated his previous prediction that taxpayers would have to contribute to the bail-out of the company.
– with AAP
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