Steel & Tube eyes NZX50 after Arrium sells majority stake for $91.2m
BUSINESSDESK: Local steel products maker Steel & Tube is looking at a return to the NZX 50 index after ASX-listed owner Arrium sold its majority stake for $91.2 million.
Steel & Tube chief executive Dave Taylor told BusinessDesk the underwritten sale of the shares by Craigs Investment Partners was a done deal and will add a number of institutional investors to its share registry.
He expects the greater liquidity will help Steel & Tube return to the benchmark index at its next review, which would generate more interest in the company.
"The deal's done. It's my understanding it was placed to a collection of institutional and retail investors," Mr Taylor says. "If you look at our share registry there's not that many institutional investors because of the lack of liquidity."
The Australian company, formerly known as OneSteel, appointed an investment bank to underwrite and manage the sale of its Steel & Tube stake at $2.05 a share, a 15% discount to the closing price yesterday. The stock dropped 8.3% today to $2.22.
Mr Taylor says the company will have to review its strategy with a new capital structure, which could include raising capital if there was any industry consolidation. He declined to comment on whether Steel & Tube was looking at any acquisitions.
In late 2008 Arrium made a tilt at a full takeover of Steel & Tube, offering $4 a share, but later gave up when it became clear world markets were set to plunge. More recently, the Australian company has repositioned itself away from being simply a steel company into a broader resources firm.
This month, Arrium rejected a $A1 billion bid by an Asian consortium led by Hong Kong commodities trader Noble Group and South Korean steel firm POSCO.
Arrium's Steve Hamer has resigned from the Steel & Tube board, effective immediately. Arrium-appointed Dean Pritchard will stay on the board and relinquish the chair to John Anderson.
ASX-listed Arrium shares were unchanged at 78.7 Australian cents.