WHY HAVE ARRIUM SHARES BEEN SUSPENDED?
Arrium's lenders - including Australia's four major banks - have rejected a $1.23 billion new funding deal that would have seen them take a more than 50 per cent haircut on their debt.
Arrium has struggled to come up with funding proposals that satisfy lenders and on Wednesday suspended trading in its shares until a proposal can be announced.
WHY IS ARRIUM IN TROUBLE?
Arrium has been hit by the plunge in iron ore and steel prices over the past two years. It delivered a full year loss of $1.9 billion in 2014/15.
The BHP spin-off, formerly known as OneSteel, says its Whyalla steelworks in South Australia and its iron ore mining business are draining around $230 million cash every six months.
The company had debt of $2.1 billion in December.
HAVE OTHER COMPANIES BEEN AFFECTED?
Australia's steel industry has long complained about government inaction in the face of a slump in prices and a surge in cheaper imports from China.
The country's only other major steel producer - Bluescope also struggled last year and was poised to shut down its flagship Port Kembla steelworks in NSW.
It has since posted a sharp turnaround by cutting jobs, freezing pay and securing a three-year tax break from the NSW government.
Among iron ore miners, all but the top three producers are losing money at current prices.
WHAT IS AT STAKE?
Arrium warned in February it would mothball the South Australia operations - putting at risk at least 1,100 jobs - if it couldn't reduce costs.
However, inability to reach agreement with lenders over fresh funding is likely to push the company into administration.
Investors might also need to write off their meagre holdings: Arrium shares last traded at 2.2 cents, a fraction of the 48 cents they were worth when the company last raised equity in September 2014.
WHAT HAPPENS NEXT?
Arrium expects to provide an update on the discussions with lenders within a week.
Australian lenders are reportedly pushing the struggling company to go into voluntary administration.
Lenders could alternatively force a break up of the company: Arrium's Moly-Cop business, the world's largest supplier of grinding media used in mining and construction , remains its only profitable division.
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