Nick Xenophon's newest candidate for the upcoming South Australian election has denied allegations he made racist comments in a fax message decades ago.

This morning Mr Xenophon announced Tom Antonio as the SA Best candidate for the regional seat of Giles.

In 1992, former MP Ian Gilfillan told Parliament Mr Antonio and another councillor were responsible for sending a fax with a heading "Licence to shoot Aborigines".

This morning at his official campaign launch, the former acting mayor of Whyalla Council and prominent businessman was asked whether there was truth to allegations.

"It is an absolute lie and I will be taking legal action on anybody who throws any sort of allegations as such at me, because it is absolutely fabricated and it's a total lie," Mr Antonio said.

"I knew nothing about it and had no contact or understanding until it came out. I have no idea, I've never seen it [fax] so I can't comment on something I know nothing about."

Antonio advocated for Whyalla and steelworks: Xenophon

Mr Xenophon said he had discussed the matter with his candidate.

"He was very distressed about these allegations," he said.

Nick Xenophon announcing his latest SA Best candidate, Tom Antonio, who denied claims he sent a racist fax message. ( ABC News: Nick Harmsen )

"They're not true, they're false and malicious and Tom has a very strong relationship with the indigenous community in Whyalla and more broadly in the region and he takes great offence from that."

Mr Xenophon said he wanted Mr Antonio to run because he believed he was a strong advocate for the local community while Arrium was in administration.

"He said at the time, to me and the world that closure was not an option for the Whyalla steelworks … [the administrator] actually singled out Tom Antonio for his tenacity and for his hard work," Mr Xenophon said.

Earlier, Premier Jay Weatherill disputed that claim during a campaign announcement in Whyalla.

"Tom was decidedly unhelpful and the administrator had to speak to him about his behaviour jeopardising the rescue of Arrium," Mr Weatherill said.

"He played an incredibly destructive role through that whole process."

Liberals announce Giles candidate

Up until recently, Mr Antonio was a member of the Liberal Party and said he was approached to run for the party in the seat.

The Liberal Party has since announced Mark Walsh will contest the seat of Giles in the coming election.

Liberal party state director Sascha Meldrum said Mr Walsh was raised and works in the region.

"I have no doubt that he is the best person to represent the people of Giles as part of a Marshall Liberal Government following the March state election," Ms Meldrum said.

Mr Walsh said he would focus on regional roads and business growth.

"Strong business growth will ensure we can invest in much-needed infrastructure projects which will make our regional roads safer and will provide quality health and aged-care services that our community is so reliant on," he said.