Morgan Stanley will run the sale process for Arrium Australia – the steel and iron ore group minus Moly-Cop – with the mandate to pursue a trade sale rather than ASX listing.
The Australian Financial Review’s Street Talk column cites sources who say a “handful” of investment banks were considered by administrators KordaMentha.
The highly profitable Moly-Cop grinding media business is being sold separately. Deutsche Bank is running the Moly-Cop sale process.
The trickiest part of the sale will be the Whyalla steelworks, which were loss-making at the time of the April administration, though which would plunge the town into economic crisis if closed.
It is the least appealing part of Arrium Australia, but the outcry against a buyer shutting it down would be significant. According to a recent economic analysis by Flinders University, the closure would cost the 22,000-person town to the tune of up to $530 million and nearly 4,000 jobs.
Meanwhile, no agreement has been reached yesterday in negotiations between the Australian Workers Union and KordaMentha on a pay cut for Whyalla workers, reports AAP.
The administrators were seeking a 12 per cent pay cut over three years and the AWU 7.5 per cent.