A bitter chaser for Arrium

In pushing to speak to Arrium's lenders about the company's debt levels, Posco shows ethics that leave a sour taste and should raise alarms.

I am rapidly reaching the conclusion that is not in the national interest for Korea’s Posco and partners to acquire Arrium/OneSteel.

If Australians went to Korea and tried to jeopardise the credit standing of a sound Korean company so Australia could buy them at a low price, then the Australians would be packed home on the next plane. We don’t do things that way, but if we are going to be part of the Asian community perhaps we had better learn the Asian way – if people behave badly they should be treated badly.

In normal circumstances if shareholders in a company like Arrium decided to sell to the Korean Steel maker and its partner’s then Wayne Swan should have no hesitation in approving the deal, especially as Korea is a valuable trading partner

Even if Arrium shareholders are foolish enough to sell at a fire sale price that is not the Treasurer’s responsibility – it has nothing to do with the national interest. We are going to need foreign capital and if a Korean company can take advantage of our foolishness then that’s their good fortune and they should not be blocked on those grounds. (The four horsemen of Arrium’s near apocalypse, November 1).

But if a Korean, or any other international company begins to play really hardball then we need to think twice. The Koreans have gone off and talked to South Australian Premier Jay Weatherill. Again that is exactly what a bidder should do.

But, The Australian’s Bryan Frith reports that the Korean consortium took the unusual step of asking to speak to Arrium’s lenders about Arrium’s debt levels.

If that means the Koreans are trying to scare Arrium’s lenders then we have to question their ethics (BREAKFAST DEALS: Angling for Arrium, November 2).

In effect they would be saying to Arrium lenders that Arrium might not to be able to repay to put pressure on the Arrium board to sell at a low price so Korea can make a big return.

The Arrium debt carried some risk while the new iron ore facilities were being built but now that they are completed the Arrium debt is backed by a global industrial asset, which is a world leader in mining grinding balls plus the port infrastructure. And then there is the profitable iron ore mine.

It's true that to attract substantial support from self managed funds Arrium needs to have lower gearing and I discussed options yesterday but in the absence of a world calamity the debt carries low risk.

If the Koreans want Arrium then they must pay something like $1.50 a share. At that point there will be no argument.

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