New bidders line up for Arrium

South Korean private equity firm Newlake Investments and Australian steelmaker Posco have lined up against opposing bid Liberty House-CIMEC to bid for soon to be liquidated steelmaker Arrium, according to The Australian.

Arrium’s liquidation is progressing and advisers are said to be looking for potential buyers. Arrium’s manufacturing business and its Whyalla steelworks are being sold.

The Whyalla steelworks is unattractive to buyers because it is costly and reliant on large volumes of steel output to turn a profit, which has rendered it a loss making entity.

Arrium’s voluntary administrator KordaMentha has so far been eager to sell the remaining assets in one sale but a breakup could be inevitable.

According to the flyer document obtained by the Australian for the Arrium Australia sale, the company’s Whyalla steelworks was forecast to make an A$11m loss for the 2017 financial year.

The South Australian government is likely to cap the environmental liabilities for the Whyalla asset and also potentially any redundancy costs for any buyer, which means Arrium’s assets may be also more attractive.

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