<article>British consortium <a style="color: #000080;" href="http://dealstreetasia.com/tag/gfg-alliance" target="_blank" rel="noopener noreferrer">GFG Alliance</a> said on Wednesday it had signed a binding agreement to acquire deeply indebted Australian steel company <a style="color: #000080;" href="http://dealstreetasia.com/tag/arrium" target="_blank" rel="noopener noreferrer">Arrium Ltd</a>, trumping a South Korean group backed by steel giant <a style="color: #000080;" href="http://dealstreetasia.com/tag/posco" target="_blank" rel="noopener noreferrer">Posco</a>.</article>

British consortium <a style="color: #000080;" href="http://dealstreetasia.com/tag/gfg-alliance" target="_blank" rel="noopener noreferrer">GFG Alliance</a> said on Wednesday it had signed a binding agreement to acquire deeply indebted Australian steel company <a style="color: #000080;" href="http://dealstreetasia.com/tag/arrium" target="_blank" rel="noopener noreferrer">Arrium Ltd</a>, trumping a South Korean group backed by steel giant <a style="color: #000080;" href="http://dealstreetasia.com/tag/posco" target="_blank" rel="noopener noreferrer">Posco</a>.
The British group plans to modernize the aging steelworks, together with Arrium&#8217;s mining and steel distribution businesses, after it collapsed last year following a downturn in steel and iron ore markets.
&#8220;We aim to leverage the advantages of integration across the value chain, from raw materials and metal production to high-end engineered products,&#8221; Sanjeev Gupta, executive chairman of industrial turnaround company Liberty House, said in an email to Reuters.
<a style="color: #000080;" href="http://dealstreetasia.com/tag/liberty-house" target="_blank" rel="noopener noreferrer">Liberty House</a> operates together with energy and commodities business SIMEC under the $9.4 billion Gupta Family Group (GFG) Alliance.
The agreement follows a competitive bidding process that saw a Seoul-based private equity syndicate led by Newlake Alliance and JB Asset Management chosen on June 15 as the preferred bidder, only to have GFG return with a revised offer.
Mark Mentha, the head of financial administration company KordaMentha, working on behalf of creditors owed more than $2 billion, said GFG Alliance had submitted a modified offer for the Arrium businesses on Tuesday night.
&#8220;Taking all factors into consideration, including the timeframes required to complete a sale, KordaMentha and our sale advisers Morgan Stanley decided that GFG was an option superior to the conditional offer of the Korean alliance,&#8221; Mentha said.
&#8220;GFG provided a quicker path to completion in August. The Korean bidders needed more time than that,&#8221; a spokesman for KordaMentha told Reuters separately.
The Korean bid also attached more conditions, including the need to obtain A$400 million ($303.8 million), potentially from the Australian government, to keep the existing steel plant operating during the modernization work.
&#8220;GFG&#8217;s plan was seen as cleaner, with less conditions,&#8221; the spokesman added.
The sale is subject to approval by Arrium&#8217;s committee of creditors, which meets next week, Mentha said.
&#8216;SURPRISED AND DISAPPOINTED&#8217;
The South Korean consortium backed by POSCO, however, was still interested in buying Arrium, a Newlake official told Reuters, declining to comment on whether it would sweeten the offer, or take legal action against the decision.
&#8220;We are very surprised by and disappointed with the decision,&#8221; the source with direct knowledge of the matter said, adding that his group was told of the decision only this morning.
&#8220;We made a superior proposal with competitive bid price and sustainable long-term post-acquisition plans. We are not sure whether the seller&#8217;s decision fully reflects the best interests of all involved stakeholders, including the employees and regional economies,&#8221; said the source, who declined to be identified because of the sensitivity of the matter.
He said its plan to introduce POSCO&#8217;s Finex steelmaking technology would enable Whyalla Steelworks to post an annual profit of A$100 million to A$200 million for the next 30 years, creating jobs and reviving the local economy. The Finex steelmaking technology helps cut costs and emissions.
Arrium collapsed in April 2016 with A$2.8 billion ($2.13 billion) in debt after creditors rejected a $927 million bailout proposal by private equity group GSO Capital Partners that would have paid no more than 55 cents on the dollar on their claims.
A purchase price was not disclosed.
However, both bidders indicated during the sales process that they were prepared to spend more than A$1 billion upgrading Arrium&#8217;s Whyalla steelworks in South Australia state and on its mini-mills, steel distribution and iron ore mining divisions.
Australian treasurer Scott Morrison said he expected to clear the transaction with the federal government&#8217;s Foreign Investment Review Board later on Wednesday.
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Reuters

British consortium GFG Alliance has signed a binding agreement to acquire Australian steel company Arrium Ltd, trumping a South Korean group.

UK's GFG Alliance signs agreement to buy Australia's Arrium

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UK's GFG Alliance signs agreement to buy Australia's Arrium

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