News: Morgan Stanley Hired to Sell/Recapitalise Arrium Australia
Investment bank Morgan Stanley has secured the mandate to run a sale process for all of the Arrium assets excluding the Moly-Cop mining consumables business.
The appointment comes after administrator KordaMentha took pitches from a handful of investment banks.
Morgan Stanley's mandate is to recapitalise the whole of the business, including the Whyalla steelworks, as a going concern. Only a trade sale will be explored with an initial public offering not under consideration, sources said.
A sale price of up to $1 billion enterprise value is expected.
The assets, which have been dubbed Arrium Australia, include the OneSteel Metalcentre operations, the Australian Reinforcing Company and OneSteel Reinforcing.
These are all profitable and tidy businesses mainly centred on the east coast of Australia, and are likely to be fairly straightforward to sell.
The headache for potential buyers, though, is Whyalla.
It is the least appetising of the assets and poses the most thorny problem because of the political outcry that would follow if it were to eventually be closed down by a buyer of the rest of the Arrium business.
One potential outcome that has been under discussion would see an Asian steel company buy the business for its distribution strengths and cut a deal with government to shut Whyalla.
However, sources said on Thursday night that the key focus was to keep Whyalla running and sell Arrium Australia in its entirety.
Deutsche Bank is managing a dual-track sale process for Moly-Cop, as also revealed by this column.
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