Arrium’s Moly-Cop sold to American Industrial Partners

Arrium’s Moly-Cop business has been bought by US private equity firm American Industrial Partners for $1.6bn.

Moly-Cop’s steel grinding balls.

US private equity firm American Industrial Partners has bought Arrium’s Moly-Cop for $US1.23 billion ($1.6bn).

The deal was signed this morning and came after a closely-fought contest for the grinding media business involving rival private equity firm KPS Capital.

Moly-Cop is part of the listed Arrium business that collapsed into voluntary administration earlier this year.

The deal is likely to see Arrium’s lenders, who are owed $2.8bn, collect at least 50c in the dollar on their loans after the mining and metals group’s failure.

Arrium has been in the hands of voluntary administrator KordaMentha and adviser Deutsche.

Moly-Cop manufactures steel balls used for mining and dominates the global market with about 80 per cent market share.

The deal will see Moly-Cop sold for a price higher than the $1.5bn bidders offered to pay for the operation in a previous sale attempt process run by UBS and Lazard, in which Platinum Private Equity and Argand were the two final contenders.

Confirming the sale today, Moly-Cop CEO John Barbagallo said it would bring “certainty and confidence” for customers, suppliers and employees.

Completion is expected in early 2017, subject to regulatory and lender approval.

Moly-Cop’s sale to private equity comes after many tipped the business would float, given institutional fund managers were eager investors.

However, they were beaten on price, with their offers coming in around seven times its forecast earnings, equating to a value of about $US1.4bn.

Blackstone, Apollo and Bain Capital were also said to have shown some early interest in the operation.

The additional components of Arrium’s business remain on the market through Deutsche and Morgan Stanley, comprising steel manufacturing operations and iron ore mining.