Almost 3500 creditors are owed more than $1.3 billion by the Whyalla Steelworks, the first meeting of creditors of OneSteel has been told.
Joint administrator Sebastian Hams said the steelworks and associated mines had been "really relying on the resilience and personal capital of employees and subcontractors to keep operations running in seriously challenging circumstances".
Prime Minister Anthony Albanese and SA Premier Peter Malinauskas announced a $2.4 billion industry support package on February 20, a day after the SA government rushed legislation through parliament that allowed it to place the steelworks into KordaMentha's hands because of the mounting debts of its owners.
"On appointment, we had $8 million in the bank," Mr Hams told the meeting in Whyalla on Monday.
"For a business that turns over a billion dollars, that is just crazy."
"And the working capital position … was really quite scary. (OneSteel) just hadn't spent money on this business, by virtue of the cash flow shortages.
"The expression that we've used … is the business is running on empty, and that relates to both the creditors and the employees."
In the seven months to the end of January, OneSteel had a before-tax loss of $319.1 million, meaning it was losing $1.5 million a day.
A total of $837.1 million is owed to unsecured creditors, including trade creditors, associated entities and prepaid sales, by OneSteel, a subsidiary of UK billionaire Sanjeev Gupta's GFG Alliance.
It also owes $40 million in royalties and water bills to the SA government, $144 million to associated entities of GFG and $137.4 million to other secured creditors.
Employee entitlements total $189.7 million, including superannuation, annual leave, long service leave and redundancies.
There were 480 people at the creditors meeting, including Mr Malinauskas and other senior government ministers.
KordaMentha aims to secure and stabilise the business, identify an "investable proposition" for a new owner, and transfer ownership with the business on a stable, long-term footing.
When administrators took over, there was a "distinct and significant" lack of stock, and the steelworks were running low on critical spares and raw materials, Mr Ham said.
There was only three days' supply of coke to keep the blast furnace running "and that is a really dangerous position to get into", he said.
"We can't talk enough about how much the employees and the contractors have contributed to keep the mine and steelworks operating …(it's been) quite extraordinary," Mr Hams said.
KordaMentha will appoint steel producer BlueScope as an expert adviser to assess current operations with a focus on the blast furnace, steelmaking and safety.
OneSteel directors have until Wednesday to deliver to administrators a Report on Company Activities and Property, detailing the company's assets and liabilities, which will be presented to the second meeting of creditors.
Creditors voted to appoint a Committee of Inspection, comprising 11 representatives from the various creditor groups.
The company's largest customer is another GFG entity, InfraBuild, and "they are critically important to us," Mr Ham said.
GFG Alliance tendered a statement to the meeting, saying that since the appointment of administrators, it had secured continued supply for InfraBuild from the steelworks.
"GFG Alliance management and entities including InfraBuild, remain committed to working co-operatively with the administrators to ensure the sustainability of Whyalla's operations and a long-term solution for steel manufacturing in Australia," the statement said.
KordaMentha plans to stage town-hall style meetings in Whyalla to update the community on developments.
Earlier, the State Government said cash from the industry package had started flowing to Whyalla businesses.
"This means businesses which otherwise would have closed are open, workers who would have been retrenched are being paid and have confidence about the future," Mr Malinauskas said.
