$200m bank deal a “fait accompli” as Arrium administrator travels to Whyalla to speak with suppliers

THE administrator of troubled mining and steel group Arrium says it’s only a matter of time before a $200 million funding arrangement with Australia’s big four banks is ratified.

Arrium cashflow deal near

THE administrator of troubled mining and steel group Arrium says it’s only a matter of time before a $200 million funding arrangement with Australia’s big four banks is ratified.

Describing the deal as a “fait accompli”, KordaMentha partner Mark Mentha said the credit facility — to be secured against Arrium assets — will help “smooth out cashflow”.

The arrangement comes on top of $1 billion already owed collectively to NAB, CBA, Westpac and ANZ — all of which were elected to a committee of creditors at Tuesday’s first creditors’ meeting.

SA Treasurer Tom Koutsantonis said it was only natural that the banks provide the “working capital” because “they are the ones that pushed the company into administration”.

However, Mr Mentha disagreed with that sentiment, describing it as “not entirely accurate”.

Mr Mentha will visit Whyalla today to inspect Arrium’s mining operations before meeting with senior staff to hear first-hand how efficiency improvements can be made at the steel plant. Another key focus of his visit is to ensure the safety of the workplace — something he said did not stem from a union request.

“I’m now personally liable, KordaMentha are liable, and we take our safety obligations very seriously,” he said.

Mr Mentha and Mr Koutsantonis will host a small business roundtable in Whyalla on Friday where they will offer support to local suppliers and creditors.

Mr Mentha said there had been “total buy-in, at least on the face of it” from suppliers.

“This maximises our ability to trade out of the current situation, which would help overcome some of the debts,” he said.

“Arrium is a multi-billion dollar company and small suppliers may feel like they aren’t being heard, but KordaMentha is ensuring that we address their concerns.”

Mr Mentha said that while any government assistance package for Arrium is not expected in the coming days, “time is of the essence”.

Arrium was placed into administration on April 7 with debts of around $4 billion. Given the complexity of the administration, which involves 94 Arrium entities, it is expected that an extension will be sought for the second creditors’ meeting.

Likely to be held in early June, this will see a detailed state of affairs and recommended strategies presented to creditors.

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