Australia: Blackstone unit funds $927m lifeline to steelmaker Arrium

Private equity firm GSO Capital Partners will invest up to $927 million to Australian steel company Arrium, which is fighting for survival in a tough world steel market where prices have plunged.

The downside of the deal is that existing shareholders, who had put up A$754 million in the company’s last capital raising in 2014, will be wiped out by the issue of fresh equity.

Australia’s big four banks will also need to agree to a haircut on about $2 billion in debt exposure to Arrium.

GSO is the credit and alternative investment arm of global investment giant Blackstone, and is worth $79 billion. Its funding will be used to retire Arrium’s existing debt and fund a restructuring of the steel and iron ore businesses.

This deal comes as a relief for the company’s management, which failed to get a good offer for its mining consumables business, despite it being the sole cash-generating unit in the group. It was also considering shutting down a major blast furnace which would have cost about 1500 jobs in South Australia.

Arrium’s stock, down 90 per cent in the past year, surged 47 per cent on Monday. The slump in the global steel and iron ore market, hit by chronic oversupply, made led to several major steel producers becoming unprofitable and struggling to keep the factories running.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.