NOTICE OF FILING

This document was lodged electronically in the FEDERAL COURT OF AUSTRALIA (FCA) on 18/04/2016 7:25:07 AM AEST and has been accepted for filing under the Court’s Rules. Details of filing follow and important additional information about these are set out below.

Details of Filing

Document Lodged: Affidavit - Form 59 - Rule 29.02(1)

File Number: VID317/2016

File Title: Mark Francis Xavier Mentha in his capacity as joint and several administrator of Arrium Limited (Administrators appointed) & Ors v Morgan Stanley Bank N.A.

Registry: VICTORIA REGISTRY - FEDERAL COURT OF AUSTRALIA

Dated: 18/04/2016 9:03:38 AM AEST Registrar

Important Information As required by the Court’s Rules, this Notice has been inserted as the first page of the document which has been accepted for electronic filing. It is now taken to be part of that document for the purposes of the proceeding in the Court and contains important information for all parties to that proceeding. It must be included in the document served on each of those parties.

The date and time of lodgment also shown above are the date and time that the document was received by the Court. Under the Court’s Rules the date of filing of the document is the day it was lodged (if that is a business day for the Registry which accepts it and the document was received by 4.30 pm local time at that Registry) or otherwise the next working day for that Registry.

To be heard in Courtroom 8D

AFFIDAVIT

No of 201 6

Federal Court of Australia

Dìstrict Registry: Victoria

Division: Corporations List

tN THE MATTER OF ARRTUM L|M|TED (ADM¡NISTRATORS APPOINTED) ACN 004 410

833 (AND EACH OF THE COMPANIES LISTED ¡N SCHEDULE ONE)

MARK FRANCIS XAVIER MENTHA, CASSANDRA ELYSIUM MATHEWS, MARTINMADDEN AND BRYAN WEBSTER IN THEIR CAPACITIES AS JOINT AND SEVERALADMTN¡STRATORS OF ARRTUM LtMTTED (ADMTNISTRATORS APPOINTED) ACN 004

410 833 (AND EACH OF THE COMPANIES LISTED ¡N SCHEDULE ONE)

First Plaintiffs

ARRTUM L|M|TED (ADM¡NTSTRATORS APPOTNTED) ACN 0O4 410 833 (AND EACH OFTHE COMPANIES LISTED lN SCHEDULE ONE)

Second Plaintiffs

and

MORGAN STANLEY BANK N.A.

Defendant

Affidavit of :

Address:

Occupation

Date:

Contents of Exhibit "MFM-'|"

MARK FRANCIS XAVIER MENTHA

Level 24, 333 Collins Street, Melbourne, Victoria

Chartered Accountant

17 April 20.16

DescriptionTab

Tab'1 Orders of the Honourable Justice Davies made on 1 1 April 2016 in respecl

of the Proxy Application

Tab 2 Orders of the Honourable Justice Davies made on 12 April 2016 in respect

of the Appointment Application

Filed on behalf of :the PlaintiffsPrepared by: Leon Zwier Ref : 011900694Law firm: ARNOLD BLOCH LEIBLERTel: 9229 9999 Fax: 9229 9900 DX 38455 MelbourneEmail : lzwier@abl.com.auAddress for service: Level 21, 333 Collins Street, Melbourne, VIC 3000

ABU491 9302v8

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Annual Report of Arrium Ltd for the year ended 31 July 2015Tab 3

Corporate structure charl of Arrium Ltd and its subsidiariesTab 4

Tab 5 A chart listing the Arrium Administration Entilies and to which facilities and

cross-guarantees they are party

Tab 6 lnterim Facility

IabT Syndicated Facility Agreement dated 31 May 2013 and amendment dated

10 March 2015

Tab 8 Syndicated Facility Agreement dated 16 April 2014 as amended and

restaled on 5 November 2014 and two subsequent amendments dated 10

March 2015 and 26 November 2015

Tab 9 Syndicated Facility Agreement dated 21 May 2015 and amendment deed

dated 26 November 2015

CBA Bilateral Facility and amendments dated 16 March 2015 and 1

December 201 5

Tab 10

Tab11 Westpac Bilateral Facility and amendmenls dated 13 March 2015 and

26 November 2015

Tab 12 NAB Bilateral Facility and amendments dated 12 March 2015 and

30 November 2015

Tab 13 Morgan Stanley Bilateral Facility and side letter

Tab 14 HSBC Bilateral Facility and amendment deed dated 23 March 2015

Tab 15 BBVA Bilateral Facility

Tab 16 2008 USPP Note Agreement and amendment dated 20 July 2015

Tab 17 201 1 USPP Note Agreement and amendment dated 20 July 2015

Tab 1B 2011 Group Guarantee

Tab 19 2008 Group Guarantee

Tab 20 Deed of cross guarantee for Arrium Ltd dated 10 June 2008

Deed of cross guarantee for SSX Holdings dated 25 June 1999Íab 21

2 o"y

Tab 22 Letter from Quinn Emanuel, solicitors for Morgan Stanley, lo (among others)

Arrium Finance and Arrium lron Ore dated I April 2016

Email from Beau Deleuil of Quinn Emanuelto (among others) John Nestel of

Herbert Smith Freehills dated 9 April 2016

Tab 23

Tab 24 Email from Beau Deleuil to the First Administrators, Arrium Ltd and Herbert

Smith Freehills dated 1 1 April 2016

Tab 25 Letter from Quinn Emanuel to Herbert Smith Freehills dated 12 April 2016

Letters from Morgan Stanley to the various Group Entities, including each of

the Protected Entities dated 12 and 13 April 2016

Tab 26

Erratum dated '14 April 2016 in respect of the 12 April LettersÍab 27

Tab 28 Media article entitled 'Morgan Stanley Sues Mining Co for $75M Loan

Payments'

Tab 29 Documents filed by Morgan Stanley in US Proceedings

Tab 30 Email from Jennifer Ball to Leon Zwier sent on 14 April 2016

Tab 3'l Scheme of Arrangement Term Sheet

Tab 32 Letters sent on behalf of Lender Group and Noleholders daled 17 April 2016

Tab 33 Email communicalions between Quinn Emanuel, ABL and ASIC dated 16

and 17 April2016

1

l, MARK FRANCIS XAVIER MENTHA of level 24,333 Collins Street, Melbourne, in the slate

of Victoria, Chartered Accountant, SAY ON OATH that:

I am, together with Cassandra Mathews, Martin Madden and Bryan Webster, the joint

and several voluntary adminislrator of the Second Plaintiffs, being Arrium Ltd

(administrators appointed) (Arrium Ltd) and the 93 other companies listed in

Schedule One to this affidavit (together with Arrium Ltd, the Arrium Administration

Entities).

I make this affidavil on behalf of myself, Ms Malhews and Messrs Madden and

Webster. References in lhis affidavit to "we", "us", "our" or "ourselves" are references

to me, Ms Mathews and Messrs Madden and Webster. ln this affidavit, I refer to me,

Ms Mathews and Messrs Madden and Websler together as the Administrators.

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Except where I otherwise indicate, I make lhis affidavit from my own knowledge.

Where I depose to matters from information and belief, I believe lhose matters to be

true.

Now produced and shown to me marked "MFM-1" is a folder of the documents to

which I refer in this affidavit. Each document is separated by a numbered tab.

References in this affidavit to a numbered tab in square brackets are references to

the relevant tab in the folder marked "MFM-1".

lntroduction

I am a Chartered Accountant. I am a founding Partner of KordaMentha, an advisory

and investment firm that provides restructuring and turnaround advice and services.

I am an Official Liquidator of the Supreme and Federal Courts, and a Registered

Liquidator. I have over 30 years' experience advising stakeholders in complex

corporate advisory, insolvency and restructuring.

I make this affidavit in support of the Plaintiffs' Originating Process. This first part of

my affidavit provides a brief summary of the key issues. Later in my affidavit I refer to

these matters in more detail.

The Arrium Administration Entities are part of the larger group of companies that are

direct or indirect subsidiaries of Arrium Ltd (the Arrium Group).

B The Arrium Group also includes the entities set out below:

(a) Arrium Mining Sales Asia Limited;

(b) AltaSteel Ltd;

(c) Commonwealth Steel Company Pty Limited (ACN 000 007 698);

(d) LiteSteelTechnologiesAmerica,LLC;

(e) Maple Leaf Metals;

(f) Moly-Cop Adesur S.A.;

(g) Moly-Cop Canada;

(h) Moly-Cop Chile S.A.;

(i) Moly-Cop Mexico S.A. de C.V.;

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Moly-Cop Steel lnc.;

Moly-Cop USA LLC;

OneSteel Group (US Holdings) lnc.;

OneSteel Recycling Hong Kong Limiled;

OneSteel Recycling, lnc.;

OneSteel US lnvestments; and

PT Commonwealth Steel lndonesia

The Moly-Cop Entities are not in voluntary administration or subject to any olher

insolvency or external administration proceedings in the jurisdictions in which they are

domiciled.

The Moly-Cop Entities carry-on a highly valuable and profitable mining consumables

business under the "Moly-Cop" brand, which generated over 50% of the Arrium

Group's EBITDA in 2015. The Moly-Cop Entities are continuing to trade on a"business as usual" basis under the control of their respective directors.

The Adminislrators are managing the business, properÌy and affairs of the Arrium

Administration Entities. They seek to preserve the status quo so as to enable them to

consider all of the options to maximise the prospects of the Arrium Group's

businesses to continue in existence or, if that is not possible maximises the returns to

all creditors and shareholders. We indirectly control the Moly-Cop Entities because

we are able to change the composition of the boards at any time we chose to do so.

The Arrium Group is indebted to ils unsecured lenders (24 banks and 19 US private

placement noteholders) (the Arrium Lenders) in the amount of approximately AUD

$2.8 billion.

The Defendant (Morgan Stanley) is one of the Arrium Lenders and is owed

approximately US $75 million, which represents about 3.4% by value of the Arrium

Group bank debt owed to the Arrium Lenders and aboul 23% by number of the

Arrium Lenders.

(together, the Moly-Cop Entities)

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Various entities in the Arrium Group, including the Moly-Cop Entities, have given

guarantees to the Arrium Lenders. The appointment of the Voluntary Administrators

to the Arrium Administration Entities has triggered defaults under those facilities and

the guarantees.

The Arrium Lenders, with the exception of Morgan Stanley, have agreed to support a

standstill Scheme of Arrangement.

Morgan Stanley will not agree to refrain from taking steps to enforce its debt against

the Moly-Cop Entities pursuant to the guarantees in favour of the Arrium Lenders.

Morgan Stanley has recently issued demands for payment to all Moly-Cop Entities.

Last Friday, 15 April 2016 Morgan Stanley issued legal proceedings against the Moly-

Cop Entities in the USA.

Unless this Court grants the relief that we seek in the Originating Process, Morgan

Stanley will enforce its rights against the Moly-Cop Entities. This will likely trigger an

uncontrolled cross-border insolvency of the Moly-Cop Entities that will result in a

serious destruction of value to the going concern business of the Moly-Cop Entities

as the Moly-Cop entities are unable to pay all the Arrium Lenders lhe amounts owed

to them and the Moly-Cop Entities are unable to pay only Morgan Stanley and

thereby prefer Morgan Stanley over all other Arrium Lenders.

I am aware from confidential reports that have been provided by other experts in

relation to the Arrium Group that the loss in value between a controlled sale or

recapitalisation of the Moly-Cop Entities business and assets and a realisation

through a cross-border insolvency process may be in excess of AUD $500 million.

The amounts recovered by Arrium Lenders from the orderly sale or recapitalisalion of

the Moly-Cop Entities reduces the Arrium Lenders' claims in the administration of the

Arrium Administration Entities and thereby benefits all creditors of the Arrium

Administration Entities the subject of claims by Arrium Lenders (Key Arrium

Administration Entities).

The Administrators have sought the relief in the Originating Process on an urgent

basis because an uncontrolled failure of the Moly-Cop Entities will severely prejudice

our ability to sell or recapitalise the whole of the Arrium Group. ln turn, this may

adversely affect the creditors and stakeholders of the Key Arrium Administration

Entities, which include:

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(a) approximately 8,000 employees (including the employees of Moly-Cop

Entities);

(b) approximately 6,000 Australian employees who are owed approximately AUD

$627 million;

(c) the township of Whyalla in South Australia which depends upon approximalely

30% of its employment from a continuation of the Arrium Group's operations

in Whyalla;

(d) the State Government of Soulh Australia insofar as it may suffer reduced

returns and the township of Whyalla is threatened in addition to reclamation

claims;

(e) Arrium Lenders who are owed AUD $2.8 billion;

(f) numerous trade creditors of the Arrium Administration Entities who are owed

about AUD $1 billion.

By this proceeding, the Administrators seek urgent relief set oul in the Originating

Process to restrain Morgan Stanley from taking any further action to enforce its debts

under the guarantees against the Moly-Cop Entities.

The only party in the Arrium Administration thal may claim to be disadvantaged by the

relief sought is Morgan Stanley. Morgan Stanley is concerned that money from the

Moly-Cop Entities may fund the voluntary administration of the Arrium Administration

entities but this concern can be dealt with by us in the manner described later in this

affidavit when I refer to a moratorium Scheme of Arrangement.

B. Background

Appointment of First Admi nistrators

On 7 April 2016, by resolution pursuant to section 4364 of lhe Corporations Act 2001

(Cth) (Act) of the directors of the Appointment Companies, Paul Billingham, Said

Jahani, Michael McCann and Matthew Byrnes of the accounting firm Grant Thornton

(First Administrators) were appointed as administrators of the Arrium Administration

Entities.

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23 On 7 April 2016, the First Administrators scheduled the f irst meetings of creditors

pursuant to section 436E of the Act to be held on Tuesday 19 April 2016 at 2:00 pm

in Sydney. The first meetings of creditors will proceed on 19 April 2016.

Replacement of First Administrators

On 11 April 2016, the Australian Workers'Union (AWU) applied to the Federal Court

seeking orders that, at the meeting or meetings held pursuant to section 436E of the

Act, each employee of the Arrium Administration Entities who is a member of the

AWU had duly appointed Mr Scott McDine to be his or her altorney for the

meeting(s), save for any employee who attends any meeting(s) in person or who

appoints an alternative proxy (Proxy Application).

On 11 April 2016, the Honourable Justice Davies made orders in the Proxy

Application [Tab 1], including an order of the type referred to in paragraph 24 above.

On 12 April 2016, the AWU and the Arrium Lenders (with the exception of Morgan

Stanley) applied to the Federal Court seeking orders that, upon the First

Administrators giving notice in writing of their resignation as administrators of the

Arrium Administration Entities, we be appointed jointly and severally as administrators

of each of the Arrium Administration Entities (the Appointment Application).

27 On 12 April 2016, the Honourable Justice Davies made orders in the Appointment

Application [Tab 21, including that we be appointed jointly and severally as

administrators of each of the Arrium Administration Entities with effect as and from

the date and time that the First Administrators give notice in writing of their

resignation as administrators of the Arrium Administration Entities.

28 Subsequently on 12 April 2016, the First Administrators gave notice of their

resignation as administrators of the Arrium Administration Entities and, by operation

of the orders made by the Honourable Justice Davies, we were appointed as joint and

several administrators of each of the Arrium Administration Entities with immediate

effect.

ASIC records in respect of the Arrium Administration Entities

I have been informed by my lawyer, Leon Zwier of Arnold Bloch Leibler, that we are

required to file a copy of the company searches in relation to each of the Arrium

Administration Entities the subject of a court application pursuant to rule 2.4(2) of the

Federal Court (Corporations) Rules 2000 (Clh).

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Together, the company searches in respect of each of the 94 Arrium Administration

Entities comprise some 1,215 pages. ln this complex administration we expect to

make numerous applications lo the Court. We seek in this application and future

applications to be relieved of the requirement 1o file company searches for each

Arrium Administration Entily so as to save time and cosÌs of continually filing the

same material in circumstances where we have made it publicly available.

A full set of the company searches in respect of each of the 94 Arrium Administration

Entities has been uploaded to:

(a) a dedicated page on the KordaMentha website in respect of the administration

of the Arrium Administration Entities, accessible via the following link:

http ://www. kordam entha.com/creditor-i nf ormation/austral ial1 64 ;

(b) a dedicated page on the ABL website in respect of the administration of the

Arrium Administration Entities, accessible via the following link:

http://www.abl.com.au/Arrium/Companvl nf ormation.htm

C. The Arrium Group

The Arrium Group businesses

32 Arrium Ltd is an international diversified mining and materials company. The Annual

Report of Arrium Ltd for the 2015 f inancial year is at [Tab 3].

33 Arrium Ltd is the ultimate holding company of the Arrium Group. A corporate

structure chart of the Arrium Group is at [Tab 4] (Structure Chart).

34 The Arrium Group operates in three key business segments in Australia, Asia and the

Americas, as follows:

(a) Arrium Mining, which includes Arrium's export iron ore business. Arrium

Mining has operations in the Middleback Ranges, as well as a wholly-owned

port at Whyalla, South Australia. ln addition to the export iron ore business,

Arrium Mining also supplies iron ore to Arrium's integrated steelworks at

Whyalla.

Arrium Steel, Australia's leading steel distributor and reinforcing steel

supplier and Australia's only manufacturer of steel long products. Arrium Steel

operates in Australia and Asia.

I

(b)

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(c) Arrium Mining Consumables, which supplies resource companies with a

range of key mining consumables. Through its Moly-Cop brand, Arrium Mining

Consumables is lhe largest supplier of grinding media in the world with

leading market positions in North America, South America and Auslralasia.

Arrium Mining Consumables includes Group entities located in Australia,

Canada, the United States, Mexico, Peru, Chile and lndonesia (the Moly-Cop

Business).

35 The Arrium Group employs approximately 6,000 employees in Australia

Moly-Cop

36 At the time of making this affidavit, none of the Moly-Cop Entities are subject to

formal insolvency proceedings.

37 Each of the Moly-Cop Entities are currently trading on a business as usual basis

3B The Moly-Cop Entities are all incorporated in jurisdictions outside Australia, with the

exception of Commonwealth Steel Company Pty Limited (CommSteel).

The Moly-Cop Business is the 'lewel in the crown" of the Arrium Group assets and

businesses. I have been informed by management of the Arrium Group entities and

the First Administrators and I have read reports which confirm that the Moly-Cop

Business:

(a) is a strongly performing business, with stable margins and a sustainable

competitive advantage ;

(b) comprises the Moly-Cop lnternational grinding media business, AltaSteel

Steel Mill and the Waratah Steel Mill, with businesses located in Canada, the

USA, Mexico, Peru, Chile, lndonesia and Australia;

(c) delivers reliable high quality mining consumable products to the mining

industry from its 10 manufacturing facilities and 1B sales offices;

(d) produces grinding media, grinding rods, railway wheels and axles, bar stock,

rebar and chemicals and employs around 1,800 people globally; and

is the largest supplier of grinding media in the world, selling approximately

1 million tonnes of grinding media per year.

(e)

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The Moly-Cop Business is currently the most profitable business in the Arrium Group.

According to the 2015 Annual Report for Arrium Ltd [Tab 3], the earnings before

interest, tax, depreciation and amortisation (EBITDA) of the various businesses of the

Arrium Group for the 2014 and 2015 f inancial years was as follows:

The figures referred to in paragraph 40 above demonstrate that the Moly-Cop

Business contributed over 507" of all EBITDA of the Arrium Group in FY2015

(A$211 million of A$371 million).

D. Arrium Ltd's financial position and creditors

Arrium Group Creditors

The total amount of outstanding unsecured debt owed by Arrium Group entities to the

Arrium Lenders is approximately AUD $2.8 billion. The unsecured finance debt is

comprised of approximately the following amounts:

(a) AUD $2.189 billion under Syndicated Facility Agreements;

(b) AUD $309 million under Bilateral Facility Agreements; and

(c) AUD $263.5 million under US private placement notes

43 The Arrium Administration Entities owe employee entitlements of approximately AUD

$200 million (on a going concern basis) and a f urther AUD $400 million

(approximately) on the termination of their employment.

44 The other creditors of the Arrium Group comprise

(a) claims by general creditors estimated at approximately AUD $1 billion; and

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EBITDA

FY2014

EBITDA

FY201 5

A$211 million A$187 millionMoly-Cop

A$686 millionMining A$90 million

A$62 million A$51 millionSteel

A$12 millionRecycling A$B million

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(b) contingent claims that may be brought against the Arrium Group may range

between AUD $650 million and AUD $1,200 million approximately.

Capital structure

Arrium Ltd is admitted to the official list of the ASX and its securities are quoted for

trading on the slock market conducted by ASX.

Leanne Chesser of KordaMentha has provided me a chart lisling the Arrium

Administration Entities and the debt facilities and cross-guarantees to which they are

parties a copy of which is at [Tab 5] (Obligor and Debtor Listing).

Secured finance debt

47 Arrium Ltd and certain of its subsidiaries have approximately US$100 million secured

finance debt incurred under a US$140 million lnterim Facility Agreement dated

22February 20'16 between, among others, Arrium Finance and Arrium lron Ore

Holdings Pty Limited as borrowers, BTA lnstitutional Services Australia Limited as

agent and certain affiliates of or funds managed by GSO Capital Partners, LP (GSO)

as lenders (lnterim Facility).

48 A copy of the lnterim Facility is at [Tab 6].

Unsecured finance debt

49 The unsecured finance debt referred is owed to Arrium Lenders pursuant to the

following agreements:

(a) three separate syndicated facility agreements entered into in 2013,2014 and

2015 (together, the Syndicated Facilities), being:

(i) a Syndicated Facility Agreement dated 31 May 2013 between, among

others, Arrium Finance and Arrium lron Ore as borrowers, Arrium Ltd

as parent and National Australia Bank Limited (NAB) as agent, as

amended QA13 SFA) (copies of the agreement and amendment

daled '10 March 2015 are at [Tab 7]);

a Syndicated Facility Agreement dated 16 April 2014 (2014 SFA)

between, among others, Arrium Finance, Arrium lron Ore and

AllaSteel Ltd (AltaSteel) as borrowers, Arrium Ltd as parent and NAB

as agent, as amended (2014 SFA) (copies of the agreement as

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(ii)

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amended and restated on 5 November 2014 and two subsequent

amendments dated 10 March 2015 and 26 November 20'15 are at

[Tab B]); and

(iii) a Syndicated Facility Agreement dated 21 May 2015 between, among

others, Arrium Finance, Arrium lron Ore and Alta Steel as borrowers,

Arrium Ltd as parent and NAB as agent, as amended (2015 SFA)

(copies of the agreement and amendment dated 26 November 2015

are at [Tab 9]);

(b) six bilateralfacility agreements (together, the Bilateral Facilities), being

(i) an A$150 million Multi-Option, Multi-Currency and Mulîi-Jurisdictional

Revolving Loan Facility dated 1B June 2014 between Arrium Finance

and certain other subsidiaries of Arrium as borrowers, Arrium Ltd as

parent and the Commonwealth Bank of Australia as lender, as

amended (CBA Bilateral Facility) (copies of the agreement and

amendments dated 16 March 20'15 and 1 December 2015 are at [Tab

101);

(ii) an A$50 million Multi-Currency Revolving Loan Facility Agreement

dated 20 November 2014 between Arrium Finance and certain other

subsidiaries of Arrium Ltd as borrowers, Arrium Ltd as parent and

Westpac Banking Corporation as lender, as amended (Westpac

Bilateral Facility) (copies of the agreement and amendments dated

13 March 2015 and 26 November 2015 are at [Tab 11]);

(iii) a US$50 million Multi-Currency Revolving Loan Facility dated 13 June

2014 between Arrium Finance and certain other subsidiaries of Arrium

Ltd as borrowers, Arrium Ltd as parent and NAB as lender, as

amended (NAB Bilateral Facility) (copies of the agreement and

amendments dated 12 March 2015 and 30 November 2015 are at

[rab 12]);

(¡v) a US$75 million Revolving Loan Facilily dated 13 June 20'14 between

Arrium Finance and Arrium lron Ore as borrowers, Arrium Ltd as

parent and Morgan Stanley Bank, N.A. as lender, as supplemented by

a side letter dated 13 June 2014 (Morgan Stanley Bilateral Facility)

(copies of the facility agreement and side letter are at [Tab 13]);

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(v) a US$25 million Multi-Currency Revolving Loan Facility dated

10 December 2014 between OneSteel Recycling Hong Kong Limited

as borrower, Arrium Ltd as parent and The Hongkong and Shanghai

Banking Corporation Limited as lender, as amended (HSBC Bilateral

Facility) (copies of the agreement and amendment dated 23 March

2015 are at [Tab 14]);and

(vi) a US$20 million Revolving Loan Facility dated 30 June 2015 between

Arrium Finance as borrower, Arrium Ltd as parent and Banco Bilbao

Vizcaya Argenlaria, S.4., Hong Kong Branch as lender (BBVA

Bilateral Facility) (a copy of which facility is at [Tab 15]);

(c) two note agreements in respect of US private placement notes issued in 2008

and 2011 (together, the Noteholders), being:

(i) a Note and Guarantee Agreement dated 9 July 2008 between, among

others OneSteel US lnvestments as issuer, Arrium Ltd as guarantor

and the noteholders named therein (as amended, 2008 USPP Note

Agreement) (copies of the agreement and amendment dated 20 July

20'15 are at [Tab 16]);and

(ii) a Note and Guarantee Agreement dated 28 June 2011 between,

among others, Arrium Finance as issuer, Arrium Ltd as guarantor and

the noteholders named therein (as amended, 2011 USPP Note

Agreement) (copies of the agreement and amendment dated 20 July

2015 are at [Tab 17]).

The Guarantees of finance debt

The obligations of lhe borrowers and issuers in respect of the lnterim Facility,

Syndicated Facilities, the Bilateral Facilities and the Noteholders are guaranteed by

certain subsidiaries of Arrium Ltd under two "group guarantees" (together, the Group

Guarantees) as follows:

(a) A Deed Poll dated 28 March 2011 executed by Arrium Ltd and certain of its

subsidiaries in f avour of the "Benef iciaries" (2011 Group Guarantee),

pursuant to which the relevant guarantors guarantee the obligations of the

"primary debtors" under documents that are nominated by Arrium Ltd as

"Guaranteed Documenls" for the purposes of the 2011 Group Guarantee.

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The "Guaranteed Documents" include the Syndicated Facilities, the Bilateral

Facilities, the 201'1 Noteholders and the lnterim Facility. A copy of the 201i

Group Guarantee including guarantor accessions executed after 28 March

2011 is behind [Tab 1B].

(b) A Deed of Guarantee dated 9 July 2008 (2008 Group Guarantee), pursuant

to which the relevant guaranlors guarantee the obligations of ìhe issuers of

the 2008 USPP Notes. A copy of the 2008 Group Guarantee including

guarantor accessions executed after 9 July 2008 is at [Tab 19]).

By reason of the two Group Guarantees, each Arrium Lender under each of the

lnterim Facility, Syndicated Facilities, Bilateral Facilities and the Noteholders has the

ability to enforce those agreements (either under the primary debt documents or

under the Group Guarantees) against the same group of Arrium Group entities.

The Moly-Cop Entities are guarantors under each of the Group Guarantees against

whom the Arrium Lenders may enforce their rights under the Syndicated Facilities,

Bilateral Facilities and USPP Notes.

ln addition to the Group Guarantees, a number of other Australian Arrium Group

entities are party to deeds of cross guarantee executed for the purpose of obtaining

relief from reporting requirements under ASIC class order 9B/1418, namely:

(a) a deed of cross guarantee for Arrium Lld dated 10 June 2008 (2008 DOCG)

(a copy of which deed is at [Tab 20]); and

(b) a deed of cross guarantee for SSX Holdings dated 25 June'1999 (1999

DOCG) (a copy of which deed is at [Tab 21]).

54 Relevantly

(a) under the 2008 DOCG and the 1999 DOCG (together, the DOCGs), all parties

guarantee the obligations to creditors of the other parties to the relevant

DOCG;

(b) the DOCGs are only enforceable if the relevant debtor is in liquidation;

the DOCGs create two separate cross-guarantor groups within the Arrium

Group (as demonstrated in the Obligor and Debtor Listing);

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(c)

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(d) Arrium Group entities thal are party to the 2008 DOCG are shaded in purple in

the column titled'10-Jun-08: ASIC Cross Guarantee'of the Obligor and

Debtor Listing; and

(e) Arrium Group entities who are party to the 1999 DOCG are shaded in purple

in the column titled '24-Jun-99: ASIC Cross Guarantee' of the Obligor and

Debtor Listing.

E. Morgan Stanley's threatened action against the Moly-Cop Entities

As at the date of this affidavit, I am not aware of any insolvency proceeding

commenced by or in relation lo any of the Moly-Gop Entities.

56 I am inf ormed by Leon Zwier, and believe, that the appointment of the Administrators

(a) constituted an event of default under each of the lnterim Facility, Syndicated

Facilities, Bilateral Facilities and USPP Notes; and

(b) resulted in the acceleration of both series of USPP Notes

57 The obligations of the borrowers under the Morgan Stanley Bilateral Facility are

guaranteed by Arrium Ltd and most of the material subsidiaries in the Arrium Group

including the Moly-Cop Entities under the 2011 Group Guarantee.

5B On B April 2016, Quinn Emanuel, solicitors for Morgan Stanley, sent a letter to

(among others) Arrium Finance and Arrium lron Ore in which Morgan Stanley

demanded immediate repayment of all outstanding amounts under the Morgan

Stanley Bilateral Facility (which totalled US$75,415,446.46 excluding costs and

expenses) lTab 221.

59 I am informed by Leon Zwier, and believe, that Said Jahani, one of the First

Administrators, told him that:

(a) upon receipt of the letter referred to in paragraph 58 above, Herbert Smith

Freehills on instruction from the First Administrators telephoned Quinn

Emanuel to request that Morgan Stanley agree to provide a short term

forbearance in favour of the Moly-Cop Entities. Beau Deleuil did not return the

telephone call;

Quinn Emanuel was also telephoned by Said Jahani. Beau Deleuil did not

return the telephone call;

EL

(b)

16

uaa{

60

61

62

63

64

(c) Herbert Smilh Freehills provided a proposed form of forbearance lelter to

Quinn Emanuel.

On 9 April 2016, Beau Deleuil of Quinn Emanuel sent an email to (among others)

John Nestel of Herbert Smith Freehills, in which he stated that Quinn Emanuel's "ffm

instructions are that Morgan Stanley will not be signing [the proposed standstill], and

require payment of their debt in fulf' lTab 231.

On 1 1 April 2016, Beau Deleuil of Quinn Emanuel sent an email to lhe First

Administrators, Arrium Ltd and Herbert Smith Freehills noting, among other things,

that Quinn Emanuel had been instructed to take enforcement steps against the

solvent guarantors under the 2011 Group Guarantee (being, among others, the Moly-

Cop Entities) [Tab 241.

On '12 April 2016, Quinn Emanuel sent a further letter to Herbert Smilh Freehills,

noting that, since the demand made on B April 2016, no payment had been received

by Morgan Stanley under the Morgan Stanley Bilateral Facility and that Morgan

Stanley intended to charge default interest on the outstanding amounts payable

under that facility [Tab 25].

On 12 April 2016, Morgan Stanley caused letters to be issued to the various Arrium

Group entities, including each of the Moly-Cop Ëntities (other than AltaSteel Ltd),

which purported to be formal notices of demand (12 April Letters).

On 13 April 2016, Morgan Stanley caused a separate letter to be issued to AltaSteel

Ltd (13 April Letter) (the 12 April Letters and the'13 April Lettertogether are al [Tab

26D.

The'12 April Letters and 13 April Letters (Morgan Stanley Demands) were sent by

email to Sarah Pearce, Treasurer (Acting) of Arrium.

66 Each of the Morgan Stanley Demands contains the following language

" ln accordance with clause 2.3 of the Guarantee Deed, the Lender

HEREBY DEMANDS and requires the immediate payment of all amounts

due, owing and payable by the Guarantor pursuant to the Guarantee

Deed. Without limiting the generality of this demand for the payment of

all amounts due, owing and payable by the Guarantors to the Lender, as

at 12 April 2016 the total amount owing under the Guaranlee rs

U 5675, 447,90 3.75 ( De bt )."

65

,¡iþ.t

.-.c '"\7\ /

17

67

6B

On 14 April 2016, Quinn Emanuel issued an erratum in respecl of the'12 April Letters

a copy of which is at [Tab 27].

As at the date of swearing this affidavit, Morgan Stanley has not withdrawn the

Morgan Stanley Demands or given any undertaking to forebear from taking further

action against any of the Moly-Cop Entities. Nor has Morgan Stanley agreed to

provide prior notice to the Administrators before taking any further action against any

Moly-Cop Entity under the Morgan Stanley Bilateral Facility and the Group

Guarantees.

On Saturday 15 April 2016 lbecame aware through a media report that Morgan

Stanley may have already commenced at least one proceeding in the United States

against some of the Moly-Cop Entities. Morgan Stanley and its lawyers did not

disclose to the voluntary administrators or our lawyers that Morgan Stanley had done

so even though we were in negotiations in relation to the issues.

The media article entitled 'Morgan Stanley Sues Mining Co. for $75M Loan

Payments' is published online at

http://www.law360.com/articles/785371/morqanstanlevsuesminingcof orT5mloanpaym

ents (a copy of which is behind [Tab 28]). The ar-ticle states, among olher things:

" Morgan Stanley Bank NA filed a suit in Delaware Chancery Court on Friday

seeking repayment of a $75 million loan provided to an Australian mining

company currently in insolvency proceedings there. The bank filed the suit

seeking to have the court order Arñum Ltd. and its subsidiary companies to

repay the $75 million revolving credit facility it provided under a 2013

agreement and to prevent the companies from transferring assefs out of the

U.S. and outside the reach of Morgan Stanley. 'MSBNA has no assurances

that defendants will not try to transfer their assets from the United Slales fo

Australia or any other foreign jurisdiction beyond MSBNA's reach. Any such

transfers will likely be irretrievable," the complaint said. Arrtum Finance Pty.

Ltd. and Arrium lron Ore Holdings Pty. Ltd. are the borrowers under the credit

agreement, which is guaranteed by named defendants Litesteel Technologies

America LLC, MolyCop USA LLC, Onesteel Group lnc., Onesteel Recycling

lnc. and Onesteel lnvestments, all Arrium subsidiaries."

On Saturday 16 April 2016, I was provided with a copy of the US Proceedings

instituted by Morgan Stanley [Tab 29].

69

70

wJ-.,n- t

71

1B

72 The named Defendants to the US Proceedings are the following Moly-Cop entities

(a) LiteSteel Technologies America, LLC;

(b) Moly-Cop USA LLC;

(c) OneSteel Group (US Holdings) lnc;

(d) OneSteel Recycling lnc; and

(e) OneSteel US lnvestments, a partnership whose partners are OneSteel US

lnvestments 1 Pty Ltd and OneSteel US lnvestments 2 Pty Ltd.

73 One of the orders sought by Morgan Stanley in the US Proceedings is

'[P]ending final resolution of this action, [Morgan Stanley] seeks the entry of an order

(a) maintaining the status quo and (b) prohibiting Defendants from transferring any of

their assets outside the United Sfafes, other than in the ordinary course of bustness,

pledging or granting claims with respect of those assefs or otherwtse transferring

them to any of the debtors in the Administration Proceedings.'

F. Likely impact of Morgan Stanley actions against Moly-Cop Entities

74 ln our opinion, based on the enquiries and investigations we have carried out since

our appointment as Administrators:

(a) the Moly-Cop Entities which have received the demands do not have sufficient

available liquidity to satisfy in full the demands of all of the Arrium Lenders

entitled to the benefit of the Group Guarantees;

(b) the Moly-Cop Entities are unable to prefer Morgan Stanley over all other

Lenders with the benefit of the Group Guarantees;

(c) in the absence of relief being granted by this Court limiting Morgan Slanley's

power to take steps to enforce its guarantee, or prosecute the US proceedings

or any other proceedings, the Moly-Cop Entities which received the demands

would need to consider their own solvency position and may seek formal

bankruplcy protection in their own jurisdictions. I am told by Leon Zwier and

believe that the Moly-Cop Entities are waiting to be informed of the outcome

of this proceeding before they consider their position further.

K¿-'19

75

76

I am also informed by Leon Zwier and believe that there are three Moly-Cop Enlities

in different jurisdictions which are under more immediate threat of local insolvency

processes as a result of the demands made by Morgan Stanley:

(a) lhe Australian part of the Moly-Cop Business, in circumstances where 94 of

the other Australian-based Arrium Group entities are currently in

administration;

(b) the Chilean part of the Moly-Cop Business, being the most valuable

component of the Moly-Cop Business which accounts for approximalely 27'/"

of the value of the Moly-Cop business. From preliminary discussions with

Chilean advisors, the issuing of the demands by Morgan Stanley may have

already triggered a 30 day period in which the Chilean Moly-Cop Enlity must

effectively call a shareholders' meeting if it determines the company has an

obligation that it cannot immediately pay. lt relief is granted in this proceeding,

it may constitute sufficient forbearance to avoid an insolvency adminsitration,

(c) the Peruvian part of the Moly-Cop Business, which accounts for approximately

10% of the value of the Moly-Cop Business. Similarly, the issue of the

demands may trigger local liquidation proceedings in respect of the Peruvian

entity.

lf Morgan Stanley continues to pursue its strategy of seeking immediate payment of

the full amount of its debt under the Morgan Stanley Bilateral Facility from the Moly-

Cop Entities under the Group Guaranlees, I expect that the other Arrium Lenders will

not agree to any ongoing standstill arrangements with the result that the entire A$2.8

billion unsecured debt owed the Lender Group and the Noteholders will fall due.

Should that happen, the Moly-Cop Entities will almost certainly fail and enter

insolvency procedures in the various jurisdictions in which they are domiciled as set

out in the table below (based on the information in the Arrium Annual Report 20'15

[rab 3]):

&T-/-1 7

e/ ¿

Place of incorporation orregistration

Guarantor

Alberta, CanadaAltasteel Limited

Arrium Mining Services Asia Limited Hong Kong

20

Litesteel Technologies America, LLC United Stales

Commonwealth Steel Company Pty Limited(ACN o0o oo7 698)

New South Wales

Maple Leaf Metals A partnership registered inAlberta Canada

PeruMoly-Cop Adesur S.A

Moly-Cop Canada Alberta, Canada

ChileMoly-Cop Chile S.A.

Moly-Cop Mexico S.A. DE C.V Mexico

Molycop Steel lnc Canada

United StatesMoly-Cop USA LLC

Onesteel Group (US Holdings) lnc United States

Hong KongOnesteel Recycling Hong Kong Limited

Onesteel Recycling lnc United States

Onesteel US lnvestments United States

lndonesiaPT Commonwealth Steel lndonesia

77 ln our opinion, it is fundamentally important that if we are to explore a realisation or

recapitalisation of the Arrium Group, we require a period of time to do so without the

threat of an imminent collapse of the Global Arrium Group. Moreover, if there are to

be any asset realisations they need to take place in an orderly way in order lo

maximise value. Owing to the scale and international nature of the Moly-Cop

Business, we would expect that an orderly sale or recapitalisation process which

would fully test the market and maximise the realisable value of the Moly-Cop

Business would take six to nine months.

W"l"21

'flt \ ¡

-74ta

79

Our adminislration of lhe Arrium Administration Entities would be seriously

jeopardised should the Moly-Cop Enlities be forced into a premature, unplanned

formal insolvency process.

lf the Moly-Cop Entities become subject to a formal insolvency appointment or other

restructuring proceeding, their financial performance is likely to deteriorate as a result

of:

(a) customers cancelling contracts as a result of termination clauses or seeking

more favourable terms,

(b) crystallisingcontractualpenalties;

(c) suppliers requiring cash on delivery;

(d) employee turnover;

(e) inability to generate new customers during the period of uncertainty; or

(f) competitors seeking advantage by poaching clients, key employees or

diversifying product range to become a direct competitor,

B0 Prior to our appointment, confidential reporls were obtained in relation to

(a) the realisable value of the Moly-Cop Business on a going concern basis

without any formal insolvency processes being commenced in relation to any

of the Moly-Cop Entities; and

(b) the realisable value of the Moly-Cop Business should a formal insolvency

process be commenced in relation to those entities.

81 As a consequence of reading those confidential reports, discussions with the First

Administrators and other enquires made by KordaMentha partners and staff since our

appointment, we believe that the commencement of a formal insolvency process in

relation to the Moly-Cop Entities will negatively impact the realisable value of the

Moly-Cop Business by an amount in excess of AUD $500 million.

82 Given that Morgan Stanley has not agreed to withhold taking further steps to enforce

its Guarantees given by the Moly-Cop Entities or withdraw the Morgan Stanley

Demands issued to the Moly-Cop Entities, the Administrators have applied to the

Wþ22

/'\\ /'

o.l

B4

B5

Court for urgenl relìef lo reslrain Morgan Stanley from taking any further such action

and precipitating an uncontrolled cross-border insolvency of the Moly-Cop Entities.

I am informed by Leon Zwier that Jennifer Ball of Clayton Utz acts for CommSteel,

the only Australian Moly-Cop Entity. On 14 April 20'1ô, Jennifer Ball sent an email to

Leon Zwier of ABL (a copy of which is at [Tab 30]), which said:

"Dear Leon,

Further to our telephone conversation just now, I have been asked by thedirectors of Commonwealth Steel Company Pty Limited, which is not in VA toadvise them as a matter of urgency today on steps they need to take toprotect themselves personally in response to the letter of demand receivedfrom Morgan Stanley demanding immediate payment of the debt owed underthe cross guarantee.

As you can appreciate the company is not in a position to pay the demand.The directors are concerned regarding the solvency of the guarantor entitiessitting outside the VA group including, Commonwealth Steel Company PtyLimited.

I have spoken to Scott Kershaw who apparently told the directors this morningto seek that advice from me. lt seems to me there is an urgent need for thesubsidiary directors of the companies who have been sent this letter ofdemand to receive the legal advice KordaMentha has received, which Iunderstand addresses these letters of demand. At present, I do not haveeither detaìls of the proposed strategy, the legal advice or any proposed courtdocuments and therefore, am not able to advise the directors on that issuetoday as I am not fully informed as to the position.

I also understand from Scott that there is not intended to be any application tothe court to seek orders this week and I would like to understand the reasonfor that timing, so that I can give comfort to the directors.

I would be grateful for your urgent response."

The Administrators have serious concerns that for so long as the demands issued by

Morgan Stanley to the Moly-Cop Entities remain outstanding and Morgan Stanley

does not agree to suspend or withdraw those demands, or refrain from taking steps to

enforce its rights, the directors of the Moly-Cop Entities, may at any moment

commence insolvency procedures with the resultant likely destruction of value to lhe

business and assets of those entities.

We have therefore moved to the Court as quickly as possible seeking urgent relief as

sought in the Originating Process.

&23

fr\l

86

G. TheAdministrators'Solution

As a solution to avoid the damaging consequences of an insolvency of the Moly-Cop

Entities, the Administrators seek orders in lhe Originating Process designed to

preserve the status quo during the voluntary administration period of the Arrium

Administration Entities and that will treat the creditors comprising the Arrium Lenders

equally.

Proposed section 4474 orders

Firsl, the Administrators seek an order pursuant to seclion 447A oÍ the Act that

section 440J ol the Act be modified to extend to guarantees given by the Moly-Cop

Entities in respect of debts owed by the Arrium Administration Entities to the Arrium

Lenders.

BB Second, the Administralors seek an order pursuant to seclion 447A of the Act that

section 440D(1) of the Act be modified to extend to proceedings against the Moly-

Cop Entities.

B9 For the reasons set out in this affidavit, I consider that all creditors and stakeholders

of the Key Arrium Administration Entities will benefit from the implementation of the

proposed "ring-fencing" strategy and the extension of the statutory moratorium by

way of the proposed section 447A orders to the Moly-Cop Entities to preserve the

status quo while all of the options to recapitalise, restructure or sell the assets of the

Arrium Group are fully explored by the Administrators.

90 I do not consider that Morgan Stanley will suffer any significant prejudice as a

consequence of the proposed section 447A orders on the basis that:

(a) the proposed 447A extension is temporary in nature and is designed to

preserve the status quo only during the administration of the Arrium

Administration Entities and Morgan Stanley's rights are otherwise preserved;

(b) the proposed 447A order would operate in the same manner in relation to all

Arrium Lenders (including Morgan Stanley) and all Noteholders, thereby

preserving the relativities between the Arrium Group's financial creditors;

if the Moly-Cop Entities file for formal bankruptcy protection, Morgan Stanley's

claim will be stayed pursuant to the bankruptcy regimes in the relevant

jurisdictions; and

87

ilitr\t"''

/'\r.

(c)

24

91

(d) if the Moly-Cop Entities dispose of assets in response to the demands of

Morgan Stanley, any payment to Morgan Slanley would likely constitute an

unfair preference which would be subject to claw-back in any subsequent

formal insolvency process in relation to the Moly-Cop Entities.

The Administrators have been aware that money from the Moly-Cop Entities cannot

be used to fund the Arrium Administration Entities and have agreed to take steps to

make sure that this will not take place. Set out below in the context of a moratorium

Scheme of Arrangement between Arrium Ltd (Administrators Appointed) and the

Lenders I describe in more detail the protections we are prepared to put in place in

lhat regard.

On the basis of the matters set out in this affidavit, I respectfully seek that the Court

grant the relief sought in the Originating Process.

Simple Moratorium Lender Creditors' Scheme of Arrangement

Third, Arrium Ltd (Administrators Appointed) has proposed a simple moratorium

lender creditors' scheme of arrangement (Scheme). The Scheme, if implemented,

will bind the following Arrium Lenders:

(a) all syndicated participants under the Syndicated Facility Agreements dated 31

May 20.13, 16 June 2014 and 21 \ilay 2015;

(b) all f inanciers under the Facility Agreements provided by Banco Bilbao Vizcaya

Argentaria SA, HSBC, Commonwealth Bank of Australia Limited, Morgan

Stanley, National Australia Bank Limited and Westpac Banking Corporation;

(c) Noteholders under the Note and Guarantee Agreement dated as of 9 July

2008; and

(d) Noteholders under the Note and Guarantee Agreement dated as of 28 June

2011,

which are entitled to the benefit of guarantees given by the Moly-Cop Entities

(together Scheme CrediÌors).

The key feature of the proposed Scheme is a binding standstill agreement that will be

entered into by Arrium Ltd and the Scheme Creditors and Mark Korda of Korda

Mentha (as the Scheme Manager) pursuant to the provisions of Part 5.1 of the Act.

92

93

Kr

94

25

95

96

The key terms of the proposed Scheme are set out in a term sheel (Term Sheet)

[Tab 31].

I summarise below at a high level, the operative provisions of the Scheme set out in

the Term Sheet:

the Scheme will bind the Arrium Lenders (who are equal ranking unsecured

creditors of various Arrium Administration Entities and who have the benefit of

the Group Guarantees against the Moly-Cop Entities);

(b) Scheme Creditors will be treated equally under the Scheme;

(c) the Scheme will impose a temporary moratorium on Scheme Creditors from

taking or continuing with any enforcement action or proceedings against any

Moly-Cop Entity;

(d) the Scheme will have 'sunset date' of 31 January 2017 or 6 months from the

commencement of lhe Scheme (unless varied by agreement of the

Administrators and the requisile majority of Scheme Creditors);

(e) in return for giving the moratorium in favour of the Moly-Cop Entities, the

Voluntary Administrators will execute a deed poll in favour oï Scheme

Creditors which provides for:

(i) convening fortnightly meetings to provide information to Scheme

Creditors in respect of the Moly-Cop Entities;

(ii) the provision of information to Scheme Creditors in relation to the

Moly-Cop Entities;

(iii) 'lock-up' arrangements which will prevent cash or assets of the Moly-

Cop Entities being transferred to the Arrium Administration Entities

outside of the ordinary course of business; and

(iv) the Voluntary Administrators will use their best endeavours to cause

the Moly-Cop entities to reimburse the Scheme Credilors' costs

associated with the Scheme and its implementation;

the Scheme Manager will be given a power of attorney to act in the name of a

Scheme Creditor to cure any default of the Scheme by that Scheme Creditor.

(a)

$.L

(f)

26

{\-"¿

9B

97 The Scheme, if implemented, will have the consequence of

(a) preserving the status quo in relation to the Arrium Group so as to provide the

Administrators and lhe Arrium Group wilh a reasonable standstill and

forbearance period, during which we can undertake a detailed review,

restructuring, recapitalisation and/or sale process of the whole or parts of the

Arrium Group;

(b) preserving, so far as possible, the value of the Moly-Cop Business;

(c) facilitating orderly communication and the provision of information between

the Administrators and the Moly-Cop Entities and the Scheme Creditors.

The Lender Group (other than Morgan Stanley) currently holds 96.6% of the AUD

$2.8 billion unsecured debt owed by the Arrium Group entities under:

(a) the Syndicated Facilities;

(b) the Bilateral Facilities;

(c) the USPP Notes;

(collectively, the Arrium Bank Debt)

99 Morgan Stanley will be a Scheme Creditor for the purposes of the proposed Scheme.

Morgan Stanley's outstanding debt of approximately US $75 million under the Morgan

Stanley Bilateral Facility represents approximately 3.4'/" of the Arrium Bank Debt by

value.

100 We have received letters dated 17 April 2016

(a) on behalf of the Arrium banks; and

(b) on behalf of the Noteholders,

which disclose that all of Arrium's banks and all Noteholders (apaft from Morgan

Stanley) are one hundred percent (100%) in support of the Scheme. Copies of those

letters are at Tab 32.

101 The proposed Scheme creditors comprise

hiht l¡'.1\'

-¿4- =

27

(a) 23 lenders in the Lender Group under the Syndicated Facilities and the

Bilateral Facilities; and

(b) 19 Noteholders; and

(c) Morgan Stanley

102 The Arrium banks and the Noteholders are supportive of the Scheme and

(a) hold approximately 96.6% by value of the Scheme creditors' claims; and

(b) represent 93.7% by number of the Scheme creditors

'103 I believe that the Scheme will be supported by the requisite number and value of

Scheme Creditors pursuant to section a1 1( )(a) of the Act if the scheme meetings are

convened as sought in the Originating Process. However, I seek relief from this Court

to enable the Scheme to be considered by the Scheme credilors in circumstances

where the status quo can be preserved.

104 The Administrators have propounded the Scheme and been intimately involved in the

drafting of the Term Sheet. We agree to enter into the Deed Poll the terms of which

are set out in the "Conditions" section of the Term Sheet. ln particular, if the Scheme

is implemented we will, among other things, use our best endeavours to:

(a) not cause or permit any Moly-Cop Entity to grant security, incur indebtedness

or dispose of assets otherwise than in the ordinary course of their business or

if we form the view that such action is necessary or advisable to maximize the

chances of the Moly-Cop Entities, or as much as possible of their businesses

continuing in existence; or if that is not possible, resulting in a better return for

the creditors and members of the Moly-Cop Entities than would result from an

immediate winding up of those companies; and

(b) not seek or receive any funding or asset transfers (other than any transactions

between Arrium Group entities in respect of intra-group sales or trading

activities in the ordinary course of business) including by way of dividend,

loan, advance, intercompany loan payment or otherwise from the Moly-Cop

Entities.

Pending the implementation of the Scheme, we are also prepared to provide a like

undertaking to preserve the status quo. This undertaking will also address Morgan

ku,$./ \

f-"/28

Stanley's concerns referred to in the US proceeding. However, we are in the process

of refinancing the GSO secured interim facility (lnterim Facility). The lnterim Facility

has been secured by the Moly-Cop Entities prior to our appoinlment. We may cause

alternative securities to be provided by the Moly-Cop Group to the new financier(s)

which are the same as those which secure the lnlerim Facility.

105 These provisions of the proposed Deed Poll and this undertaking will preserve the

status quo and safeguard creditors of the Moly-Cop Entilies, including contingent

creditors, against any preferential transfer of value away from the Moly-Cop Entities

to the Arrium Administration Entities.

Gorrespondence between ABL and ASIC and ABL and Morgan Stanley

'106 Between Saturday 16 April and Sunday 17 April 2016, ABL has been in

communication with both ASIC and Morgan Stanley. Set out in Tab 33 are copies of

the electronic communications between them.

SWORN by the deponent al Melbourne in

the state of Victoria on 17 April 2016

Before me: Signature of depon

Signature of witness

f¡ilFtÊÑn

29

SCHEDULE 1

A.C.N. 006 769 035 Pty Limited (ACN 006 769 035)

Akkord Pty Limited (ACN 060 486 991)

ANI Construction (W.4.) Pty. Limited (ACN 008 670 871)

Arrium Finance Pty Limited (ACN 093 954 940)

Arrium lron ore Holdings Pty Limited (ACN 152752844)

Arrium Limited (ACN 004 410 833)

Atlas Group Employees Superannuation Fund Pty. Limited. (ACN 060 568 998)

Atlas Group Staff Superannuation Fund Pty. Limited. (ACN 059 654 241)

Atlas Group Superannuation Plan Pty Limited (ACN 065 649 050)

Australian National lndustries Pty Limited (ACN 000 066 071)

Australian Wire lndustries Pty Limited (ACN 064 267 456)

Austube Mills Holdings Pty Limited (ACN 123 160 172)

Austube Mills Pty Limited (ACN 123 666 679)

AWI Holdings Pty Limited (ACN 004 157 475)

B.G.J. Holdings Proprietary Limited (ACN 004 859 536)

Bradken Consolidated Pty Limited (ACN 000 011 932)

Central lron Pty Limited (ACN 143 503 397)

Cockatoo Dockyard Pty Limited (ACN 000 025 918)

Comsteel Pty. Limited (ACN 006 218 524)

Coober Pedy Resources Pty Lirnited (ACN 151 599 905)

Eagle & Globe Pty Limited (ACN 000 122 305)

Email Accumulation Superannuation Pty Limited (ACN 065 263 658)

Filed on behalf of :the PlaintiffsPrepared by. Leon Zwier Ref: 01 1 900694Law firm: ARNOLD BLOCH LEIBLERTel:9229 9999 Fax:9229 9900 DX 38455 MelbourneEmail. lzwier@abl.com.auAddress for service: Level 21 , 333 Collins Street, Melbourne, VIC 3000

ABU491 9302v8

f't "r

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Email Executive Superannualion Pty Limited (ACN 065 263 BlB)

Email Holdings Pty Limited (ACN 092 348 555)

Email Management Superannuation Pty Limiled (ACN 065 263710)

Email Metals Pty. Limited. (ACN 004 574 681)

Email Pty Limited (ACN 000 029 407)

Email Superannuation Pty Limited (ACN 065 263 603)

Emwest Holdings Pty. Limited. (ACN 001 992 123)

Emwest Properlies Pty Limited (ACN 003 146 334)

GSF Management Pty Limited (ACN 064 116 874)

J. Murray-More (Holdings) Pty Limited (ACN 000 158 412)

John McGrath Pty Limited (ACN 000 004 937)

Kelvinator Australia Pty Limited (ACN 007 873734)

Litesteel Products Pty Limited (ACN 109 854 677)

LitesteelTechnologies Pty Limited (ACN 113 101 054)

Metals Properties Pty. Limited. (ACN 000 040 040)

Metalstores Pty Limited (ACN 000 267 112)

Metpol Pty Limited (ACN 000 927 373)

N.K.S. (Holdings) Proprietary Limited (ACN 004 321 313)

O Dee Gee Co. Pty. Limited. (ACN 004 208 191)

Onesteel Americas Holdings Pty Limited (ACN 147 067 016)

Onesteel Building Supplies Pty Limited (ACN 000 045 349)

Onesteel Coil Coaters Pty Limited (ACN 123138732)

OneSteel Manufacturing Pty Limited (ACN 004 651 325)

Onesteel MBS Pty Limited (ACN 096 273 979)

Onesteel Nsw Pty Limited (ACN 003 312 892)

AihkL/

/+v

J

Onesleel Queensland Ply Limited (ACN 010 558 871)

Onesteel Recycling Holdings Pty Limiled (ACN 059 240 952)

Onesteel Recycling Overseas Pty Limited (ACN 105 479 356)

Onesteel Recycling Pty Limited (ACN 002 707 262)

Onesteel Reinforcing Pty Limited (ACN 004 148 2Bg)

Onesteel Stainless Australia Pty Limited (ACN 004 610 851)

Onesteel Stainless Pty Limited (ACN 006 362 652)

Onesteel Technologies Pty Limited (ACN 096 380 219)

OnesteelTrading Pty Limited (ACN 007 519 646)

Onesteel US lnvestments 1 Pty Limited (ACN 131 211 606)

Onesteel US lnvestments 2 Pty Limited (ACN 131 211 571)

Onesteel Wire Pty Limited (ACN 000 010 873)

Overseas Corporation (Australia) Pty Limited (ACN 004 242 086)

P & T Tube Mills Pty Limited (ACN 010 469 977)

Palmer Tube Mills Pty Limited (ACN 010 469 879)

Pipeline Supplies of Australia Pty Limited (ACN 008 573 475)

Reosteel Pty Limited (ACN 000 142094)

Roentgen Ray Pty Limited (ACN 000 028 106)

Southern lron Pty Limited (ACN 119 611 068)

SSG lnvestments Pty Limited (ACN 085 490 526)

SSG No.2 Pty Limited (ACN 087 840 720)

SSG No.3 Pty Limited (ACN 087 840 515)

SSGL Share Plan Nominees Pty Limited (ACN 085 943 540)

SSX Acquisitions Pty Limited (ACN 090 574 520)

SSX Employees Superannuation Fund Pty Limited (ACN 064 431 116)

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4

SSX Holdings Pty Limited (ACN 087 813 116)

SSX lnternational Pty Limited (ACN 084 990 947)

SSX Pty Limited (ACN 082 181 726)

SSX Retirement Fund Pty Limited (ACN 064 431 303)

SSX Services Pty Limited (ACN 083 090 831)

SSX Staff Superannuation Fund Pty Limited (ACN 064 431 072)

Tasco Superannuation Management Pty Limited (ACN 071 901 712)

The ANI Corporation Pty Limited (ACN 000 421 358)

The Australian Steel Company (Operations) Pty Limited (ACN 069 426 955)

Tube Estates Pty. Limited. (ACN 010 449 939)

Tube Street Pty Limited (ACN 004 785 157)

Tube Technology Pty. Limited. (ACN 010 469 986)

Tubemakers of Australia Pty Limited (ACN 000 005 498)

Tubemakers Somerton Pty Limited (ACN 004 595 546)

Western Consolidated lndustries Pty Limited (ACN 001 185 913)

Whyalla Ports Pty Limited (ACN 153 225 364)

X.C.E. Pty Limited (ACN 004 081 903)

XEM (Aust) Ply Limited (ACN 004 158 025)

XLA Pty Limited (ACN 004 239 392)

XLL Pty Limited (ACN 006 301 266)

XMS Holdings Pty Limited (ACN 008 742 014)

Zinctek Pty limited (ACN 01 0 474 790)

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5

EXHIBIT "MFM.1''

No. of 2016Federal Court of Australia

District Registry: Victoria

Division : Corporations List

tN THE MAfiER OF ARRTUM LIM|TED (ADMTNTSTRATORS APPOINTED) ACN 004 410833 (AND EACH OF THE COMPANTES LTSTED rN SCHEDULE ONE)

MARK FRANCIS XAVIER MENTHA, CASSANDRA ELYSIUM MATHEWS, MARTINMADDEN AND BRYAN WEBSTER IN THEIR CAPACITIES AS JOINT AND SEVERALADMTNTSTRATORS OF ARRTUM L|M|TED (ADMTNTSTRATORS APPOINTED) ACN 004410 833 (AND EACH OF THE COMPANIES LISTED lN SCHEDULE ONE)

First Plaintiffs

ARRTUM LtMtrED (ADMTNTSTRATORS APPOTNTED) ACN 004 410 833 (AND EACH OFTHE COMPANTES LTSTED lN SCHEDULE ONE)

Second Plaintiffs

and

MORGAN STANLEY BANK N.A.

Defendant

This is the exhibit marked "MFM-1" referred to in the affidavit of MARK FRANCIS XAVIER

MENTHA sworn before me on 17 April 2016.

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