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NOTICE OF FILING

This document was lodged electronically in the FEDERAL COURT OF AUSTRALIA (FCA) on

8/09/2016 12:04:16 PM 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: Defence - Form 33 - Rule 16.32

File Number: VID527/2016

File Title: Mark Francis Xavier Mentha in his capacity as joint and several

administrator of Arrium Limited (Administrators Appointed) & Ors v GSO

Capital Partners LP & Ors

Registry: VICTORIA REGISTRY - FEDERAL COURT OF AUSTRALIA

Dated: 8/09/2016 12:04:27 PM 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.

Form 33

Rule 16.32zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

First Respondent's Amended Defence

No. VID 527 of 2016

Federal Court of Australia

District Registry: Victoria

Division: Corporations List

IN THE MATTER OF ARRIUM LIMITED (ADMINISTRATORS APPOINTED) (ACN 004410833) and OTHERS (according to the Schedule attached)

MARK FRANCIS XAVIER MENTHA, CASSANDRA ELYSIUM MATHEWS, MAR TINMADDEN AND BRYAN WEBSTER IN THEIR CAPACITIES AS JOINT AND SEV ERALLIQUIDATORS ADMINISTRATORS OF ARRIUM LIMITED (ADMINISTRA TORSAPPOINTED) (ACN 004410 833) AND OTHERS (according to the Sch edule attached)

First Plaintiffs

ARRIUM LIMITED (ADMINISTRATORS APPOINTED) (ACN 004410833 ) and OTHERS(according to the Schedule attached)

Second Plaintiffs

GSO CAPITAL PARTNERS LP AND OTHERS (ACN 116067602) and OTHER S(according to the Schedule attached)

DefendantsRespondents

To the Plaintiffs' amended statement of claim dated 3 June24 August 2016, the First

Respondent (GSO) says by way of defence as follows (adopting the defined terms contained

in the amended statement of claim unless otherwise indicated):

1. It admits the allegations in paragraph 1.




3451-4103-9363v4Filedon behalf of First Respondent

Prepared by

Law firm Corrs Chambers WestgarthTel (02)92106598 Fax (02) 92106611

Email Sam.delaney@corrs.com.auzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBADX Ref SPD/LR/GSOC21000-9117533-14

Address for service 8-12 Chifley Square, Sydney, NSW 2000

[FormapprovedzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA01/08/20111

2





9. It admits the allegations in paragraph 9 as says further that:

(a) as part of the Recapitalisation Documents, each of Moly-Cop Security

Grantors executed an Accession Deed (Security Provider)zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA(Accession

Deeds);

Particulars

A copy of the Accession Deeds is in the possession of GSO's solicitors and

may be inspected by prior appointment.

(b) there were terms of the STD, inter alia, that:

(i) "Beneficiary" includes, inter alia:

(A) BNY Canada and BNY Australia (as "Security Trustees");

(B) BTA Australia (as "Initial Representative");

(C) GSa (as "Recapitalisation Beneficiary");

(D) each Participant as set out in Part A of Schedule 1 to the

Interim Facility Agreement (as "IFA Beneficiary") (clause

1.1);

(ii) "Finance Document" includes, inter alia, the PSAs (as "Security")

and the Interim Facility Agreement (clause 1.1);

(iii) "Obligor" includes, inter alia:

(A) Arrium Finance (as the "Company");

(B) Arrium Limited (as the "Parent");

(C) each Moly-Cop Security Grantor (as a party to the

Accession Deeds in their capacity as a Security Provider)

(clause 1.1);

(iv) "Secured Money" includes, inter alia, all debts and monetary

liabilities of the Obligors to any of the Beneficiaries under, or in

relation to, any Finance Document in each case and in any capacity,

irrespective of whether the relevant debts or liabilities:

3451-4103-9363v4

3zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

(A) are present or future;

(B) are actual, prospective, contingent or otherwise;

(C) are at any time ascertained or unascertained;

(0) are owed or incurred by or for the account of an Obligor

alone, severally or jointly with any other person;

(E) are owed to, or incurred for the account of, any Beneficiary,

alone, severally or jointly with any other person;

(F) are owed to any other person as agent (whether disclosed

or not) for or on behalf of any Beneficiary;

(G) are owed or incurred as principal, interest, fees, charges,

Taxes, damages (whether for breach of contract, tort or

incurred on any other ground), losses, costs or expenses,

or on any other account;

(H) are owed to or incurred for the account of any Beneficiary

directly or as a result of:

• the assignment or transfer to any Beneficiary of

any debt or liability of an Obligor (whether by way

of assignment, transfer or otherwise); or

• any other dealing with any such debt or liability;

(I) are owed to or incurred for the account of a Beneficiary

before the date of this deed, before the date of any

assignment of this deed to any Beneficiary by any person

or otherwise; or

(J) comprise any combination of the above (clause 1.1);

(v) "Security" includes the PSAs (as "Initial Security") (clause 1.1);

(vi) "Security Provider" means a person who has granted Security

(clause 1.1);

(c) there were terms of each of the PSAs, inter alia, that

(i) all capitalized terms used herein and not otherwise defined shall

have the meanings assigned to such terms in the STO (clause 1.1);

(ii) "Secured Obligations" means the "Secured Money" under, and as

defined in, the STO (Article I, clause 1.6);

3451-4103-9363v4

4

(iii) "Secured Party" means each "Beneficiary" under, and as defined in,

the STD (Article I, clause 1.6);

(iv) "Collateral" means all Accounts, cash, Chattel Paper (including

without limitation, all Tangible Chattel Paper and all Electronic

Chattel Paper), Commercial Tort Claims, all computer programs and

all intellectual property rights therein and all other proprietary

information, including but not limited to Domain Names and Trade

Secrets, Contracts and Contract Rights arising thereunder,

Copyrights, Deposit Accounts and all other demand, deposit, time,

savings, cash management, passbook and similar accounts and all

monies, securities, Instruments and other investments deposited or

required to be deposited in any of the foregoing, Documents,

Equipment, Farm Products, Fixtures, General Intangibles, Goods,

Instruments, Inventory, Investment Property, letters of credit, Letter-

of-Credit Rights, Licenses, Patents, Permits, Pledged Deposits, all

Software and all Software licensing rights, all writings, plans,

specifications and schematics, all engineering drawings, customer

lists, goodwill and licenses, and all recorded data of any kind or

nature, regardless of the medium of recording, Supporting

Obligations, Trademarks and Other Collateral, wherever located, in

which any Moly-Corp Security Grantor now has or hereafter

acquires any right or interest, and the Proceeds (including Stock

Rights), insurance proceeds, Proceeds and products of any and all

of the foregoing, together with all books and records, customer lists,

credit files, computer files, programs, printouts and other computer

materials and records related thereto, but excludes any Excluded

Asset. For the avoidance of doubt, "Collateral" includes all real and

personal property of the Moly-Corp Security Grantors that is not an

Excluded Asset (Article I, clause 1.6);

(v) each of the Moly-Corp Security Grantors hereby pledges, assigns

and grants to BNY Canada or BNY Australia (as the case may be),

on behalf of and for the benefit of the Secured Parties, a security

interest in all of such Moly-Corp Security Grantor's right, title,

interest, whether now owned or hereafter acquired or arising in and

to the Collateral to secure the prompt and complete payment and

performance of the Secured Obligations. The security interests of

the Security Trustee under this Security Agreement extend to all

3451-4103-9363v4


Collateral which any Moly-Corp Security Grantor may acquire, or

with respect to which any Moly-Corp Security Grantor may obtain

rights, at any time during the term of this Security Agreement. For

the avoidance of doubt, (a) the grant of the security interest by the

Moly-Corp Security Grantors contained herein shall not be deemed

to be an assignment of an ownership interest in any intellectual

property rights owned by the Moly-Corp Security Grantors and (b)

such security interest is granted as security only and shall not

subject to the BNY Canada or BNY Australia (as the case may be)

or any other Secured Party to, or in any way alter or modify, any

obligation or liability of any Moly-Corp Security Grantor or any other

Person with respect to or arising out of the Collateral or any

agreements related thereto (Article II); and

(vi) each Moly-Cop Security Grantor hereby agrees, jointly with the

other Moly-Cop Security Grantors and severally, to indemnify,

reimburse and hold harmless BNY Canada or BNY Australia (as the

case may be) and the Secured Parties, and their respective

successors, assigns, directors, agents and employees (each an

"Indemnitee" and collectively, the "Indemnitees"), from and against

any and all liabilities, obligations, damages, injuries, penalties,

claims, demands, suits, costs, and expenses of any kind and nature

(including, without limitation, all expenses of litigation or preparation

therefor whether or not BNY Canada or BNY Australia (as the case

may be) or any Secured Party is a party thereto) imposed on,

incurred by or asserted against the Indemnitees, in any way relating

to or arising out of this Security Agreement or any other Finance

Document, or any other document executed in connection herewith

or therewith or in any way connected with the administration of the

transactions contemplated hereby or thereby or the enforcement of

any of the terms of, or the preservation of any rights under any

thereof, or in any way relating to or arising out of the manufacture,

ownership, ordering, purchase, delivery, control, acceptance, lease,

financing, possession, operation, condition, sale, return or other

disposition, or use of the Collateral (including, without limitation,

latent and other defects, whether or not discoverable by BNY/

Canada or BNY Australia (as the case may be) or the Secured

3451-4103-9363v4


Parties or any Moly-Corp Security Grantor, and any claim for patent,

trademark or copyright infringement) (Article VIII, clause 8.17);

(d) it was a further term of the PSA with aneSteel US Holdings and Moly-Cop

USA that this Security Agreement shall be construed in accordance with and

governed by the law of the State of New York in the United States of

America (Article VIII, clause 8.16); and

(e) there were terms of the Recapitalisation Deed, inter alia, that:

(i) "Recapitalisation" means the recapitalisation of the Arrium Group in

the manner consistent in all material respects with the Term Sheets

taken as a whole, involving amongst other things:

(A) certain GSa Affiliates providing the Senior Facility to the

Arrium Group in the amount of USD665 million;

(8) certain members of the Arrium Group entering into a

Working Capital Facility of A$500 million or GSa and/or

certain GSa Affiliates making available a working capital

line of the USD equivalent of A$500 million;

(C) the proceeds (net of expenses and restructuring costs) of

the debt and equity funding referred to in paragraphs 1 and

6 of this definition being used to repay or redeem, at less

than par value, the Compromise Debt;

(D) the remainder of the Compromise Debt being extinguished

or otherwise retired in full;

(E) Arrium Limited issuing Warrants to GSa and/or certain

GSa Affiliates on the terms set out in the Warrant Term

Sheet; and

(F) a fully underwritten renounceable Rights Issue to be

conducted by Arrium Limited to raise no less than USD262

million (clause 1.1);

(ii) Arrium Limited and GSa acknowledge there will be a number of

conditions which will need to be satisfied in order for the

Recapitalisation to proceed. Such conditions include:

(A) procuring the Debt Compromise as set out in clause 4

(clause 2(b)(1));

3451-4103-9363v4


(B) agreeing and finalising the Recapitalisation Documents

(clause 2(b)(2)); and

(C) (A) completion of due diligence in relation to the business

and operation of Arrium Limited (and each of its

subsidiaries) to GSO's satisfaction and (B) final investment

committee approval of GSO of the RecapitalisationzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA(GSO

Condition) (clause 2(b)(3)).

(iii) Arrium Limited and GSO must work together in good faith and use

their best endeavours to seek either: (1) a Consensual Agreement;

or (2) a binding agreement with at least the Required Majority of

Compromise Debt Holders to vote in favour of a Creditor's Scheme,

on terms which are acceptable to Arrium Limited and GSO, each

acting reasonably (Debt Compromise) by 11:59pm on 31 July 2016

(clause 4(a));

(iv) Arrium Limited agrees to present the Recapitalisation to the

Compromise Debt Holders and to seek the Debt Compromise as

soon as practical after the date of the Recapitalisation Deed (clause

!(ill

(v) subject to clause 10.1(c), if the Recapitalisation Implementation

Agreement has not been signed, Arrium Limited will be liable to pay

a fee to GSO and/or the GSO Affiliates as notified by GSO in the

specific amount set out below (Work Fee) on the day which is no

later than five Business Days after, inter alia, Arrium Limited notifies

GSO in writing that it has become aware that such number of

Compromise Debt Holders object to the Debt Compromise (under

which the Compromise Debt would be repaid or redeemed at less

than par using funds received under the Senior Debt Facility

Agreement and the Rights Issue) such that Arrium Limited has

determined in good faith that it is not reasonably likely that the Debt

Compromise will be achieved before 11:59pm on the End Date

(clause 10.1(b)(2));

W(vi) subject to clause 13.2(c) and clause 13.2(d) Arrium Limited will pay

to GSO an amount equal to the reasonable out of pocket expenses

of GSO, and the reasonable third party accounting, tax and legal

advisory expenses (including GST) incurred by GSO from the date

3451-4103-9363v4


immediately following the date of this deed to the date of termination

of this deed in connection with:

(A) its negotiation, development and implementation of the

Recapitalisation, including its due diligence investigations

into Arrium Limited;

(B) is negotiation of an agreeable structure for the

Recapitalisation with Arrium Limited;

(C) its negotiation and drafting of this deed and

Recapitalisation Documents; and

(D) all reasonable incidental professional advice in connection

with the Recapitalisation,zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

(Costs Reimbursement) (clause 13.2(b));

fHffiYllLArrium Limited must pay the full amount of the Costs

Reimbursement payable to GSa and/or the GSa Affiliates as

notified by GSa in accordance with clauses 13.2(b) and 13.2(c) into

one or more accounts nominated by GSa within 10 Business Days

after receiving a written demand by GSa for payment of such Costs

Reimbursement (such written demand to be provided by GSa to

Arrium Limited no more than once a month) provided GSa has

provided Arrium Limited with reasonable evidence and copies of its

invoices (which copies may redact privileged information) in support

of its demand (clause 13.3(b)).

1O. As to paragraph 10, it

(a) refers to and repeats paragraphs 9(a) to (c) above; and

(b) otherwise does not admit the allegations.

11. Subject to production of the Recapitalisation Deed and reference to its full terms and

effect at trial, it admits the allegations in paragraph 11.


13. As to paragraph 13, it refers to and repeats paragraphs 9(e)(ii)-=-9(e)(v) above and

says that

(a) on 1 April 2016, the Compromise Debt Holders (as defined in cl 1.1 of the

Recapitalisation Deed) rejected the Debt Compromise (as defined in cI 1.1

and 4(a) of the Recapitalisation Deed) and gave notice of that rejection in

writing to Arrium;

3451-4103-9363v4


Particulars

Letter from Ms Annie Truong on behalf of National Australia Bank Limited to

Mr Andrew Roberts and Ms Naomi James of Arrium Limited dated 1 April

2016, and letter from Ms Renee M. Dailey of Morgan, Lewis & Bockius LLP

to the Boards of Directors of Arrium Limited and its subsidiaries (c/o Mr John

Nestel of Herbert Smith Freehills) dated 1 April 2016 (GSa Rejection

Notices). Copies of the GSa Rejection Notices may be inspected at the

offices of GSa's lawyers by appointment.

(b) on 1 April 2016, the Compromise Debt Holders represented by National

Australia Bank gave notice to Arrium Limited inter alia that the Debt

Compromise will not be achieved before 11.59pm on 31 July 2016 or at all;

Particulars

Letter from Ms Annie Truong on behalf of the National Australia Bank to Mr

Andrew Roberts and Ms Naomi James of Arrium Limited dated 1 April 2016.

(c) on 1 April 2016, Arrium Limited notified GSa in writing that Arrium Limited

had become aware that the Compromise Debt Holders had objected to and

had rejected the Debt Compromise;

Particulars

Email from Ms James of Arrium Limited to Mr Michael Whitman of GSa

dated 1 April 2016 which attached copies of the GSa Rejection Notices. A

copy of the email and its attachments may be inspected at the offices of

GSa's lawyers by appointment.

(d) by 5pm on the day prior to the End Date (4 April 2016), Arrium Limited and

GSa had not agreed or finalised the Recapitalisation Documents in

accordance with clause 2(b)(2) of the Recapitalisation Deed;

(e) in the premises, by 5pm on the day prior to the End Date (4 April 2016), it

was known to GSa and Arrium Limited that the Debt Compromise (as

defined in cI 1.1 and 4(a) of the Recapitalisation Deed) could not be procured

in accordance with clause 2(b)(1) of the Recapitalisation Deed or at all;

(f) on a proper construction of clauses 9 and 10.1(c) of the Recapitalisation

Deed, GSa was not required to provide confirmation to Arrium Limited by no

later than 5pm on the day prior to the End Date (4 April 2016) whether or not

the GSa Condition had been fulfilled as a condition of payment of the Work

Fee in circumstances where:

3451-4103-9363v4

10

(i) the Debt Compromise as set out in clause 4 had been rejected by

the Compromise Debt Holders; and

(ii) the Recapitalisation Documents had not been agreed or finalised;

(g) it otherwise denies the allegations; and

(h) in the alternative to paragraph 13(f) above, says that in the circumstances

pleaded above it would be unconscionable for Arrium Limited to rely on its

strict legal rights under clause 10.1(c)(2) of the Recapitalisation Deed.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

Particulars

Gsa repeats the matters pleaded at paragraphs 9(e)(ii)_=-9(e)(vL,13(a)

:_13(e)above.


15. As to paragraph 15:

(a) it refers to and repeats paragraph 13 above; and

(b) otherwise denies the allegations.

16. Subject to production of the Recapitalisation Deed and reference to its full terms and

effect at trial, it admits the allegations in paragraph 16.

~.1L._Subject to production of the emails and reference to their full terms and effect at trial,

it admits the allegations in paragraphzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA~1L

44.-.HL_Subject to production of the demand and reference to its full terms and effect at trial, it

admits the allegations in paragraph 44.1§..

4a-N_As to paragraphzyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA4-5~:

(a) it admits the allegations in sub-paragraph (a); and

(b) it does not admit the allegations in sub-paragraph (b).

4-e:-~Subject to production of the letters and reference to their full terms and effect at trial,

it admits the allegations in paragraph 4-620.

+7-:-~As to paragraph 4-721:

(a) it admits that the PSAs have not been released; and

(b) it otherwise does not admit the allegations.

4-&.-22. As to paragraph 22:

(a) #-itdenies the allegations and in paragraph 18 and says further that:

3451-4103-9363v4

11

(i) the Plaintiffs have failed or refused to pay the amounts referred to in

paragraph 4-&-22of the amended statement of claim;

(ii) the amounts referred to in paragraph 4-&-22 of the amended

statement of claim are liabilities, damages and/or expenses

imposed on and/or incurred by an Indemnitee (GSO) in any way

relating to and/or arising out a Finance Document (the Interim

Facility Agreement) or a document executed in connection herewith

or therewith (the Recapitalisation Deed) for the purposes of Article

VIII, clause 8.17 of the PSAs;

(iii) accordingly, each Moly-Corp Security Grantor is liable to indemnify,

reimburse and/or hold harmless GSO from and against the amounts

referred to in paragraph 4-&-22 of the amended statement of claim

pursuant to Article VIII, clause 8.17 of the PSAs;

(iv) further, the amounts referred to in paragraph 4-&-22 of the amended

statement of claim are debts and/or monetary liabilities owed by an

Obligor (each Moly-Corp Security Grantor) to a Beneficiary (GSO)

under, or in relation to, a Finance Document (PSAs) for the

purposes of the definition of Secured Monies in clause 1.1 of the

STD and Secured Obligations in Article I, clause 1.6 of the PSAs;

and

(v) in the premises, the amounts referred to in paragraph 4-&-22 of the

amended statement of claim are secured by the terms of Article II of

the PSAs.zyxwvutsrqponmlkjihgfedcbaZYXWVUTSRQPONMLKJIHGFEDCBA

Particulars

GSO refers to and repeats its Statement of Cross-claim filed in this

proceeding.

4-Q.,.~lt denies the allegations in paragraph 23.4-9

3451-4103-9363v4


Jed by Sam ··Y'e···..I·a·..·..n·..e ··y··· · ··· .

Corrs Chambers Westgarth

Lawyer for the First DefendantRespondent

This pleading was prepared by Nicholas De Young and settled b y Peter Jopling of counsel.

3451-4103-9363v4


SCHEDULE 1

Federal Court of AustraliaDistrict Registry: VictoriaDivision: Corporations List

IN THE MATTER OF ARRIUM LIMITED (ADMINISTRATORS APPOINTED) ACN 004410833 (AND EACH OF THE COMPANIES LISTED IN SCHEDULE 1)

First Plaintiffs

Mark Francis Xavier Mentha, Cassandra Elysium Mathew, Martin Madden and Bryan Websterin their capacities as joint and several administrators of Arrium Limited (ACN 004 410 833)(administrators appointed), Arrium Finance Pty Limited (ACN 093 954 940) (administratorsappointed) and Arrium Iron Ore Holdings Pty Limited (ACN 152752844) (administratorsappointed)

Second Plaintiffs

Arrium Limited (ACN 004410 833) (administrators appointed)

Arrium Finance Pty Limited (ACN 093 954 940) (administrators appointed)

Arrium Iron Ore Holdings Pty Limited (ACN 152 752 844) (administrators appointed)

OefendantsRespondents

GSO Capital Partners LPFirst OefendantRespondent

BTA Institutional Services Australia Limited (ABN 48 002 916 396)Second RespondentDefendant

BNY Trust Company of Australia Limited (ABN 49 050 294 052)Third RespondentDefendant

BNY Trust Company of CanadaFourth RespondentDefendant

3451-4103-9363v4