Lazard, UBS and KPMG to be grilled over Arrium
Twenty-two former directors and executives from Arrium plus big hitters from UBS, Lazard and KPMG will be grilled by lawyers for KordaMentha over the next three months about the $2.8 billion collapse.
Top investment bankers from UBS and Lazard and senior partners from KPMG and law firm Herbert Smith Freehills are among 22 people to be grilled by lawyers for administrators KordaMentha in the next three months in public examinations over the collapse of steel maker Arrium.
The non-executive directors of Arrium at the time of its collapse in April 2016, with debts of $4 billion, are also scheduled to be put under scrutiny in the court examinations, with former Arrium chief executive Andrew Roberts the final person on the list of "examinees" as part of KordaMentha's investigations.
KordaMentha outlined in a report to creditors in mid-December that it would commence the public examinations in 2018 as part of the insolvency firm's investigation over possible breaches of directors' duties and potential misleading conduct over the drawing down of a last-minute refinancing facility and other loans in early 2016, just before the steel company collapsed.
Details of who will be called and when, have now been set.
Lachlan Edwards, the co-head of Lazard in Australia, is one of the first big names scheduled to front the public examinations to be held in the NSW Supreme Court. His examination is set down for May 14 and 15. Lazard managing director Daniel Kleijn is due to be examined on May 16.
Former Arrium chairman Jerry Maycock will also front the court for a public examination on May 30 and May 31. The first two people to be examined are former Arrium Treasury department employees Delia Sparkes and Sarah Pearce on April 23 and April 24, respectively.
Head of mergers and acquisitions at UBS, Kelvin Barry, is scheduled to be examined on June 26, a day after UBS executive director Calum Crozier. KPMG's lead audit partner, Tony Young, will follow on June 27, with KPMG partner Julian McPherson due on June 29.
Restructuring and insolvency partners from Herbert Smith Freehills, Paul Apathy and John Nestel, are listed in late July in the "sequence of examinees" rundown. Mr Nestel has two days set aside for his examination, on July 26 and 27.
Ex-Arrium board
Arrium non-executive directors Douglas Ritchie, Rosemary Warnock, Bryan Davis, Peter Nankervis and Denise Goldsworthy will all be examined in late May. Mr Roberts, the former CEO of Arrium, will be the last person to be examined in the process, on August 1.
KordaMentha sold the Australian assets of Arrium to companies run by British billionaire Sanjeev Gupta in August 2017, saving 3000 jobs. Mr Gupta's Liberty House, in combination with his father's SIMEC operations, acquired the former Arrium assets in July from KordaMentha after 17 months under their control.
The assets included the Whyalla steelworks and electric arc mini-mills in Sydney, Melbourne and Newcastle and a national steel scrap and recycling business that handles about 1.2 million tonnes of ferrous scrap a year. Arrium collapsed in April 2016, owing $2.8 billion to about 60 banks and 30 noteholders. Total debts were at $4 billion.
The December report revealed that KordaMentha had found "several categories of debts or claims which may give rise to insolvent trading claims".
"These claims principally relate to the drawing down of the GSO interim refinance facility in March and April 2016 and the draw-down and rollover of debt under existing finance facilities," the report said.
The report said the insolvency firm is also investigating inter-company loans and inter-company trading from that period, which "may also give rise to insolvent trading claims by a liquidator".
The spotlight is on the actions of directors and executives of Arrium in the weeks following an announcement to the ASX on February 22, 2016 of a $US927 million funding package to Arrium by United States firm GSO Capital Partners as the steelmaker's financial position weakened.
GSO is the credit and alternative investment arm of global investment giant Blackstone. The GSO funding package consisted of a short-term standby facility, and a longer-term loan. KordaMentha is also closely scrutinising the draw-down of other existing loan facilities.
The big four banks, ANZ, CBA, NAB and Westpac, were owed a combined $1 billion when Arrium collapsed. The banking syndicate ultimately spurned a recapitalisation offer from Blackstone's credit arm, GSO Capital, and instead opted for the long road of having KordaMentha run the company as administrator.
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