ABC News: Arrium shareholders demand relisting, offer alternative CEO
Arrium shareholders demand relisting, offer alternative CEO
By business reporter Emily Stewart
Posted 48 minutes ago
A group of disgruntled Arrium shareholders is pushing to have the company relisted, with one even offering to run it in return for shares rather than payment.
The steelmaker is in the process of being sold, after collapsing last year owing $4 billion; including $2.8 billion to creditors, $1 billion to suppliers and $500 million in employee entitlements.
"I'm nearing retirement, if Arrium goes belly-up those options will need to be reconsidered," said Arrium Shareholders United member Robert Dadge, who has $60,000 invested in the company.
"I'll have to significantly reshape my goals, definitely have to work longer."
Arrium was spun out of BHP Billiton as "OneSteel" in 2000 and at its peak in 2009 its share price climbed above $6.
The company borrowed heavily to venture into iron ore mining in 2012 and when prices fell and Chinese steel flooded the market - it lost billions in value.
Shares slumped to just 2.2 cents before being suspended from trade.
"The global prices of iron ore and steel fell suddenly as cheap importers flooded our market with inferior product," explained Mr Dadge.
Arrium up for sale to pay off lenders
Arrium's highly profitable mining consumables business Moly-Cop has already been sold for $1.6 billion.
Key creditors, including the major banks, are keen to sell the rest of the company, as they will be first in line to get paid back, but shareholders are likely to lose their investment in full.
So Robert Dadge and a group of more than 700 investors have formed a group called Arrium Shareholders United, to fight the sale.
"The sale process is ridiculous ... They've had 13 months of continuous growth," Mr Dadge said.
"We believe selling the business is a nonsense."
Canadian Rick LaBelle holds $2 million worth of Arrium shares.
''It's not everything we have, it's a big chunk, it's not something you can wake up in the morning and get over it," he said.
"It takes a little bit of time and awful lot of work to try and make up for it."
'I won't take a dollar': Shareholder offers to serve as CEO
Mr LaBelle has been a senior mining and materials sector executive for 30 years - including as CEO of the largest steel foundry in the world - Norcast.
Mr LaBelle is now offering his services to run Arrium.
"I'd consider being CEO and I'd consider being paid in shares only," he offered.
"I won't take a dollar and let the proof be in the pudding ... That's how confident I am this thing can be turned around."
He said Arrium's investment in iron ore mines at the top of the market was bad timing, but the company is now set up to turn a profit.
"If Arrium was still operating in the public market, everybody would be heroes," he said.
"Everything is ready to go; the money has been spent, the workforce trained, the kinks are out of the system."
Mr LaBelle said the steelworks are running at full capacity, new shifts have been put on and the company is making enough cash to cover its debt.
There was much fanfare when Arrium signed a $74 million contract with Adani earlier this month.
"It takes around 50 days of cash generation to pay the interest for the whole year," Mr LaBelle observed.
"In private equity terms, it can cover the interest over six times in a year. This is not a defunct business. It's actually a very solid business."
In a statement, Korda Mentha said Arrium's operational performance has improved, "but that does not solve the fundamental problem of over $2 billion of pre-appointed debts that need to be serviced/repaid.
"These debts are unable to be serviced or repaid from operating cash flows."
Arrium's financials are kept under wraps as Korda Mentha applied to ASIC to defer reporting until October 2018.
In the meantime, the administrator is billing up to $1 million a week for running the business.
"We can't believe ASIC hasn't stepped in and halted the sale. It's beyond belief," said Mr Dadge.
Two bidders remain in the running for Arrium - UK-based Liberty House and South Korea's Posco.
Arrium Shareholders United now want an independent review, before the sale goes ahead in June.
Topics: steel, iron-ore, company-news, business-economics-and-finance, australia, whyalla-5600, sa
