Again from Matthew Stevens:
….Australian banks, in particular, were left “incandescent” when McGrathNicol’s appraisal of the confronting proposal identified that GSO and Arrium management planned to close the Whyalla steelworks.
…Arrium’s lenders have become deeply sceptical of a narrative that would sustain the closure of Whyalla and the iron ore mines. That scepticism is apparently informed by a collection of expressions of interests in acquiring Arrium Steel that have been lobbed at the banks over recent weeks.
Apparently, the indicative numbers suggest Whyalla should be throwing off an EBITDA of $150 million instead of churning through cash it doesn’t have.
For reasons that are pretty obvious, the banks view Whyalla as a non-negotiable in any Arrium work-out. The steelworks directly supports more than 2000 families in Whyalla. Each of them is a customer of an Australian bank. Most of those families would have mortgages, car loans and credit cards. The banks are keen that their lending continues to be secured by jobs.
So the steelworks must be kept open while its ability to earn itself a future is clarified. To that end, the banks are working with KordaMentha to deliver the liquidity necessary to sustain Whyalla through the opening stanza of administration and beyond.
If this is to be believed, it appears the banks did not want to close Whyalla, which is good news for all if true, and it was ARI itself that was determined to protect its ill-begotten iron ore venture come what may.
