GSO Capital Partners (GSO) has signed an agreement to provide up to $927m in funding to Australia-based steel and iron ore group Arrium as part of a recapitalisation plan.

The plan is a result of Arrium’s strategic review to achieve an appropriate structure and level of debt in a low iron ore price environment.

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GSO will also provide $140m senior secured standby loan facility agreement to Arrium to offer the company with additional liquidity if needed.

"The recapitalisation plan is designed to deliver increased equity and new long-term debt facilities."

Upon implementation of the recapitalisation plan, Arrium’s debt will come down and the company will be able to retain its mining consumables business.

The company will also have adequate funding to use towards turning around or restructuring its steel and mining businesses.

As part of the recapitalisation, Arrium also seeks to obtain secured working capital facilities of A$500m ($357m).

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Implementation of the plan is subject to both companies finalising and executing transaction documents, as well as securing all necessary regulatory and other approvals, consents and waivers.

Arrium chairman Jerry Maycock said: "The last 18 months has been an extremely challenging time for the company, and the board acknowledges the loss of shareholder value during this period.

"The recapitalisation plan is designed to deliver increased equity and new long-term debt facilities."

Arrium managing director and CEO Andrew Roberts said: "Today’s announcement provides confidence that with the recapitalisation plan we will have the balance sheet strength and business portfolio to underpin the long term future of the company."