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ARI, ARRIUM LIMITED
blacksheep
post Posted: Jul 20 2019, 10:42 PM
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Interesting article/opinion piece by Ben Pauley on the demise of ARI - Barely legal: Arrium, a fee-fest for financiers, a misery-fest for shareholders
Jul 19, 2019
QUOTE
Hidden accounts, rapacious insolvency tactics, greedy bankers. The pillage of Arrium has been a travesty for shareholders and creditors and begs the question: should short-selling laws be upgraded to save vital industries from financial ruin? Investor and shareholder activist Ben Pauley writes this oped.


QUOTE
Short sellers smashed Arrium

The primary reasons Arrium went down are cleverly hidden. The company was effectively short-sold into administration.

In September 2014, when its share price was $0.60, Arrium announced a $754 million capital raising. The capital raising price was $0.48 and, on the first day of trading after the announcement, there were 37,582,199 shares short sold and the share price collapsed to 40c.

When the offer closed, the share price was $0.345. The capital raising had been sabotaged by a combination of short-selling and algorithmic trading.

Broker trading programs were tuned aggressively to take down prices. It was accomplished the same way countless stocks have had billions of dollars removed from their market capitalisations, that is, algorithms being tuned to make artificial adjustments to prices, relentlessly forcing prices lower.

Factor number two in Arrium’s demise was Arrium management itself.

After the savage attack by short sellers, the Arrium chairman issued an address at the AGM:

“Many of the questions or comments forwarded to me in the lead up to today’s meeting were, understandably, about the share price. Our share price performance has been extremely disappointing.

There are many factors that can influence a company’s share price, but negative sentiment around growth in China including the outlook for iron ore prices, steel over-capacity in Asia, our level of debt and uncertainty around the strategic review outcomes appear to be relevant factors in poor performance”.

The reality was that the “disappointing” share price was almost all to do with predatory short-sellers executing trades that conflict with the laws that govern the markets. That should have been obvious to the chairman.

Banks, corporate undertakers clean up


A related factor concerned the banks who were involved in margin lending. Hapless clients of the banks who purchased Arrium stock on margin (borrowing from margin lenders to finance their trading) found that their shares were, in turn, lent out to short sellers.

It was a bastardly act although perfectly legal, and one which epitomises the corporate greed and lack of ethics that has crept across the financial system. The system, as demonstrated by the Royal Commission into the banks, has become consumed by a culture of unmitigated greed and left to fester under regulatory capture and indifference.

Just imagine the uproar if a bank retained such power in the case of a house mortgage loan, that is, they lend the house to someone who they know will vandalise it. It should be illegal for a bank to share knowledge about margin loans they have against stocks with anyone.

Industry super funds were also lending out large volumes of their clients’ shares to short-sellers. Compounding the misery of Arrium shareholders, the iron ore price then fell to $35 a tonne. Arrium was placed into voluntary administration due to its large debt.


QUOTE
What ifs

If the banks and industry super funds didn’t lend stock without the knowledge of the real ‘mums and dads’ owners whose assets were being destroyed in the process, Arrium’s share price could be $3 by now.

If these things didn’t happen, Arrium would probably still be in the hands of its Australian shareholders and they would have done quite well from their investment.

If the Financial Review is right, GFG Alliance now has annual earnings of $450 million to $500 million and it plans to list the Arrium assets back on the ASX.

If these things had not happened however, the insolvency practitioners from Korda Mentha would not have made millions in fees, nor their lawyers, nor the super funds profited from their stock lending fees, nor the banks via their penalty interest and refinancing opportunities, nor the investment bankers.

There is a lot of money riding on insolvency and, after the Tax Office, the first victims to be left high and dry are shareholders. Trade creditors are hard on their heels. The banks, often secured lenders, though not in this case, can get their money back.

Morgan Stanley, the sale advisor who worked with the administrator when Arrium was sold to GFG is in the box seat to do the sharemarket float. After buying the Arrium business for an estimated $700 million in 2017, the estimated price when it re-lists on the ASX is mooted at $3 billion. Expect another fee-fest.


The business is likely to be pitched as a play on the infrastructure construction market with steel from the GFG Alliance network used to build motorways, railways and the like across the country.

GFG Alliance is another offshore company which has done exceedingly well from its corporate incursion Downunder. It is a pity that this has come at the expense of Australia and Arrium shareholders while government and regulators have looked the other way.


https://www.michaelwest.com.au/barely-legal...r-shareholders/



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Jul 11 2019, 01:34 PM
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Stresses in other parts of Gupta's conglomerate might not be helpful for Whyalla's continued prosperity:
QUOTE
....beneath his meteoric growth lies a fragile and inter­dependent ecosystem: politicians desperate to save jobs in tired industries, companies keen to shed problematic assets, financiers eager to package and sell government subsidies, and investors hunting for yield in the ultra-low rates environment.

“It’s playing roulette with public funds,” said an adviser.
https://www.theaustralian.com.au/world/the-...631f54095747f72



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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
blacksheep
post Posted: Jan 14 2019, 10:21 PM
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In Reply To: nipper's post @ Oct 24 2016, 09:54 AM

Interesting article on Moly-Cop post ARI ownership - Moly-Cop: another superannuation success story that got away
Jan 12, 2019 | Business, Featured
extract
QUOTE
MOLY-COP, the world’s largest manufacturer of ball and rod grinding media used in minerals processing is, along with the Whyalla steel works, another global opportunity that went unseen and unfulfilled by Australian investors.

Just as the steel works is being doubled in size by new owners Liberty Primary Steel, Moly-Cop under new ownership has bought Metso Spain Holding, tightening the stranglehold it has on global markets for steel ball and rod.

The purchase completed in December.

Both operations were once owned by listed Australian steelmaker Arrium, which collapsed owning a suite of assets that were as unloved and underinvested as they were burdened by a mountain of debt.

Just how little Australian investors, and especially our blinkered superannuation sector, understand manufacturing assets is clear from Whyalla’s meteoric rise and Moly-Corp’s progress under ownership since 2017 by American Industrial Partners.

As well as buying a new Spanish operation turning over 60 million Euro (AUD$96 million), Moly-Cop has since built a new grinding media plant at La Joya, Southern Peru (see photo), and added a new grinding ball facility to its plant at Kamloops, Canada.

Moly-Cop comprises 10 ball manufacturing facilities capable of producing 1.7 million tonnes of media used to break down copper, gold, and iron ores.

It also manufactures alcohol and glycol-based chemicals used in various types of mineral flotation, and at Waratah in NSW, a range of forged and rolled railway wheels, forged railway axles and fully assembled wheelsets.

How a company that began as The Commonwealth Steel Company (Comsteel) in Newcastle in 1917 came to dominate the world, only along with its steel-making stablemate to see its true value appreciated by overseas investors, is something we need to understand and reverse.


read more - https://www.michaelwest.com.au/moly-cop-ano...-that-got-away/



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
blacksheep
post Posted: Aug 7 2017, 03:38 PM
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CHANGE OF NAME
Effective 28 July 2017, Arrium Limited (Subject to Deed of Company Arrangement) will trade as
A.C.N 004 410 833 Limited (Subject to Deed of Company Arrangement) (formerly Arrium Limited).



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The herd instinct among forecasters makes sheep look like independent thinkers. Edgar Fiedler

If the freedom of speech is taken away then dumb and silent we may be led, like sheep to the slaughter. George Washington
 
nipper
post Posted: Oct 24 2016, 09:54 AM
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In Reply To: nipper's post @ Apr 7 2016, 12:31 PM

It's a big week for Arrium's crown jewel, Moly-Cop.
QUOTE
Private equity bids are in, while Moly-Cop's sponsor brokers will report back to Arrium administrator KordaMentha with an underwritten initial public offering bid in coming days. It's a simple situation; the biggest number will win. Arrium's lenders want to get out at the highest price, and are agnostic as to the method.

Much of the deal is playing out in the United States. Moly Cop's numbers are all in United States dollars, funding packages are lined up by US-based financing teams and, not surprisingly, it's suitors are all big US private equity firms.

While it's hard to know exactly where the bids landed - and Friday night's offers are unlikely to be the finishing point anyway - sources said sale adviser Deutsche Bank was in the market with a $US800 million to $US900 million staple debt package worth 5.5-times to 6-times Moly-Cop forecast EBITDA.




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"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne
 
batikit
post Posted: Apr 8 2016, 10:09 AM
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In Reply To: early birds's post @ Apr 8 2016, 10:00 AM

big blow to the already bad unemployment rate in S.A wacko.gif

 


early birds
post Posted: Apr 8 2016, 10:00 AM
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In Reply To: early birds's post @ Apr 7 2016, 02:07 PM

In a move that will rattle the Federal election campaign especially in South Australia, Arrium, the country’s second biggest steelmaker, has been put into voluntary administration with debts of more than $4 billion, making it one of the largest corporate collapses in Australia since the GFC.
==========


i always sing that Queen's song when someone is down........ "another one bites the dust.....hey"
it's sad case .



 
early birds
post Posted: Apr 7 2016, 02:07 PM
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In Reply To: nipper's post @ Apr 7 2016, 12:31 PM

one steel is really well run Co. for last few decate in aussie.
seems they didn't see this sudden collapse of iron ore price and been caught out from this rout like many others.
it's sad case for our industry.
BSL might be the big winner for this. as it been a dog for so long.



 
nipper
post Posted: Apr 7 2016, 12:31 PM
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In Reply To: balance's post @ Apr 7 2016, 12:05 PM

and Banks wanted to appoint McGrathNicol to run Arrium ..... the administrators, all from Grant Thornton, were appointed to oversee the group's affairs. Not sure what that means - some speculation that "administrators ain't administrators"; perhaps implying better outcomes for some players depending on who is doin' the woik

Arrium has an estimated $2.3 billion of debt and two businesses — the Whyalla steel works and its export iron ore business — bleeding cash at a rate approaching $500 million a year.
- $380m of liabilities to contractors in the iron ore business were a deterrent to the closure or mothballing of its mining division.
- environmental cleanup liabilities (has been at Whyalla for 75 years) are unquantified
- has a few good businesses — Moly-Cop (makes rail wheels, wire ropes and the steel balls used in grinding and crushing machinery on mine sites) and the rest of its steel operations- smaller, scrap metal-fed electric arc furnaces in Victoria and NSW



--------------------
"Every long-term security is nothing more than a claim on some expected future stream of cash that will be delivered into the hands of investors over time. For a given stream of expected future cash payments, the higher the price investors pay today for that stream of cash, the lower the long-term return they will achieve on their investment over time." - Dr John Hussman

"If I had even the slightest grasp upon my own faculties, I would not make essays, I would make decisions." ― Michel de Montaigne

Said 'Thanks' for this post: early birds  
 
balance
post Posted: Apr 7 2016, 12:05 PM
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In Reply To: early birds's post @ Apr 6 2016, 10:27 AM

Yes, they have entered into voluntary administration.



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Day Trader: Lowest form of life in the known universe.
Shorter: Can limbo under a day trader.
Investor: Salt of the Earth.Sits to the right of God (Warren Buffet)
Share prices are only ever manipulated down.
Paper losses are not really losses.
Chat site posters always know better & know more than anyone about anything.
I'm 29.
The cheque is in the mail.
 
 


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