A scoop from Matthew Stevens:
Currently all of Arrium’s $2.8 billion of debt is unsecured and the big four are owed about $1 billion in relatively equal amounts. But any further lending to business by the the local major’s would be secured, and that would potentially reposition them ahead of Arrium’s exiting Armada of trade, employee and government creditors.
Arrium currently owes $1 billion to its trade creditors, an estimated $500 million in employee obligations and a presently publicly unquantified amount of clean-up liabilities to the state government. The company also owes an estimated $1.8 billion in unsecured lending from other banks and US bond holders.
…Arrium and some of its overseas creditors are said to have been stunned by the “very aggressive behaviour” of the Australian banks in attempting to “bully the company” to appoint McGrath Nicol to oversee the business.
I can’t say I blame the banks for taking a hard line. ARI management has been disastrous. That is only underlined by the position it finds itself now, in which unsecured creditors can force themselves up the credit pecking order.
Either that, or this is monopoly power in action.
