Street Talk

CBA tests Arrium debt appetite, Pepper teams with York

Edited by Sarah Thompson, Anthony Macdonald and Jake Mitchell

Oct 1, 2015 – 12.15am

Subscribe to gift this article

Gift 5 articles to anyone you choose each month when you subscribe.

Already a subscriber?

Commonwealth Bank of Australia has been pinpointed as the bank seeking to offload some of its exposure to Arrium's $1.75 billion debt pile, as revealed by Street Talk Online on Wednesday.

It's understood CBA is using more than one broker to test the appetite of potential acquirers, with price expectations said to be around the 80¢ mark.

Street Talk revealed in June that two of Arrium's big four Australian banks had approached distressed debt players about selling their exposure to the company.

News that CBA may sell its exposure to Arrium reflect lenders' concerns about the company's balance sheet amid weak commodity prices. Louie Douvis

News that CBA may sell its exposure to Arrium reflects lenders' concerns about the company's balance sheet amid weak commodity prices.

It could also destabilise the auction of its mining consumables business Moly-Cop, which is being run by UBS and Lazard, particularly if vulture funds force their way into the lending syndicate.

The embattled mining and steel group was said to have received only a handful of indicative bids for Moly-Cop.

Hedge funds are also keeping an eye on the Wiggins Island Coal Export Terminal after its largest stakeholder, multinational miner Glencore, slumped almost 30 per cent on concern the company has too much debt to withstand the decline in commodities.

Elsewhere, New York-based York Capital Management has emerged as an equity partner in Pepper Group's consortium for the Esanda Dealer Finance auction.

Pepper has assembled a consortium including equity partners and senior debt and mezzanine lenders, after a late entry to the Esanda race.

Pepper has partnered with York before, buying a 12 per cent stake in Hong Kong and southern China lenders PrimeCredit Limited and Shenzhen PrimeCredit in May.

York is also Pepper shareholder.

Pepper is facing off against Macquarie Group and China's HNA Group in the Deutsche Bank-run Esanda sale.

Sarah Thompson has co-edited Street Talk since 2009, specialising in private equity, investment banking, M&A and equity capital markets stories. Prior to that, she spent 10 years in London as a markets and M&A reporter at Bloomberg and Dow Jones. Email Sarah at sarah.thompson@afr.com

Anthony Macdonald is a Chanticleer columnist. He is a former Street Talk co-editor and has 10 years' experience as a business journalist and worked at PwC, auditing and advising financial services companies. Connect with Anthony on Twitter. Email Anthony at a.macdonald@afr.com

Jake Mitchell is a former Fairfax Media journalist. Connect with Jake on Twitter.

CBA tests Arrium debt appetite, Pepper teams with York

Introducing your Newsfeed

Read More

Latest Street Talk