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Arrium creditors reject US$927M bailout from GSO Capital

Creditorsof Arrium Ltd. shot downthe US$927 million recapitalizationproposal from U.S.-based GSO Capital Partners LP, leaving the futureof thousands of workers and the Whyalla steelworks in South Australia hanging inthe balance, The Sydney Morning Heraldreported April 4.

The companyfloated the possibility of closingWhyalla in February after the business booked an operating loss of A$43 millionin the first half of fiscal 2016.

The rejectionvote was almost universal across the company's lending banks and noteholders, withthe banks saying the company went with the GSO deal without consultation and planto sue directors for breach of duties.

SouthAustralia's Treasurer Tom Koutsantonis urged creditors to ensure the Whyalla steelworksremained operational while Australia's Federal Industry Minister Christopher Pynesaid the government will give every opportunity to Arrium to weather the currentdifficult global market conditions.

The ASX-listedcompany has about A$2 billion debt outstanding and GSO is expected to come up witha better offer with the likes of Argand Partners LLC and New York's Cerberus CapitalManagement on standby.

Meanwhile,Scott Martin, the AustralianWorkers Union organizer for Whyalla and the Eyre Peninsula said, "The dealwas all about cash flow. Now that it's not happening it begs the question of whatare the banks proposing now."

Separately,union workers were divided on a vote that will lead to a 13% wage cut, with Martinsaying the workers are already giving away between A$15,000 and A$30,000 annuallyafter the company took cost cuttingmeasures.

In March,some 400 miners rejectedArrium's proposal for them to take a temporary 10% pay cut, saying the company mustprovide a clear plan for continued operations of its mine and steel works.