From the SMH
Outgoing Arrium chairman Peter Smedley has defended his 14-year stewardship of the steel maker, saying his board got the group’s shock $754 million capital raising “absolutely right” as he bows out of life as a public company director.
…Extrapolating iron ore prices 18 months ahead and with sentiment collapsing, the board took a view it would not have enough headroom on its banking covenants.
He said the strategic direction has been executed “very well” and Arrium now has three platforms: steel making, iron ore and the world’s largest grinding media business.
In September 2013, Korean steel giant POSCO and Hong Kong commodities trader Noble lobbed a $1.2 billion takeover bid for Arrium at 75¢ a share.
The bidders complained at the time that Arrium refused to engage with them, but Mr Smedley dismissed the bid as “a non-offer”.
I have no problem with the capital raising. In fact, I reckon it was ahead of its time, cashing in on the idiotic bullishness of equity towards iron ore prices. Smedley has been proven spot on in that regard.
The real black mark is the mishandling of the POSCO offer. There was real money in the market at the time that Smedley managed to slap away with the ultimate consequence of reducing his shareholder’s investment by two-thirds.
