May 31, 2017 / 11:08 AM / 8 months ago

Australia's Arrium steel group narrows buyers to two

SYDNEY, May 31 (Reuters) - Final bids were lodged on Wednesday for the assets of Australian steel group Arrium Ltd , with creditors hoping for a one-price-for-everything transaction completed by the end of the month, two sources familiar with the matter said.

Britain’s Liberty House, the industrials and commodities group that has been snapping up troubled steel plants around the world is one of only two bidders remaining for Arrium, a steel company, with mining and distribution arms that fell on hard times after using debt to expand, according to the sources.

A spokeswoman for Liberty House declined to comment.

The other bidder is Seoul-based Newlake Alliance Management, comprising former executives of private equity giant Blackstone, which is looking to employ Finex technology under licence from Korean steel group Posco, one of the sources said.

Newlake could not be reached for comment.

Arrium collapsed in April 2016 with A$2.8 billion ($2.1 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.

The creditors’ committee includes Australian lenders Commonwealth Bank, National Australia Bank, Westpac and ANZ Bank, which are owed a combined A$1 billion.

Arrium’s U.S.-based Moly-Cop division, regarded as the jewel in the company, was sold to private equity firm American Industrial Partners for $1.23 billion in November.

Since the collapse, the company has been run by financial administrators KordaMentha, which is overseeing the sales process.

A spokesman for KordaMentha declined to comment

One source close to the bidding said it could be several weeks before the offers were fully assessed but that creditors were anxious to have a determination by the end of June in order to start the 2017-18 financial year afresh.

Liberty House, which operates together with energy and commodities business SIMEC under the $9.4 billion Gupta Family Group (GFG) Alliance, hit the headlines last year when it offered to rescue steel plants owned by Tata Steel UK that were on the verge of shutdown. Liberty has since bought an aluminium smelter in Scotland and a steel plant in the United States.

Arrium’s main asset is the 76-year-old Whyalla steel mill, which almost seized up after a powerful storm cut power, leaving molten steel to cool in its blast furnace.

Arrium used debt to expand iron ore production during the mining boom of the last decade. But slowing Chinese demand and a over-production by majors Rio Tinto and BHP Billiton resulted in a collapse in iron ore and steel prices.

The South Australian state government has pledged A$50 million to a new owner of the Whyalla steelworks to help upgrade the plant.

$1 = 1.3410 Australian dollars Reporting by James Regan, editing by David Evans

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