Steel & Tube parent Arrium to sell half-stake at 15% discount
BUSINESSDESK: ASX-listed mining and minerals group Arrium plans to sell its 50.3% stake in local construction and materials supplier Steel & Tube for about $91.2 million.
The Australian company, formerly known as OneSteel, has appointed an investment bank to underwrite and manage the sale of its Steel & Tube stake at $2.05 a share, it says.
That is a 15% discount to the Steel & Tube's last trading price. It expects retail and institutional investors will buy the shares, and will use the cash to reduce debt.
"Steel & Tube has been a good investment for Arrium - the sale of our shareholding reflects our strategy to focus on growing our mining and mining and consumables business," Arrium managing director Geoff Plummer says.
"The sale builds on approximately $A120 million received to date from business and asset sales under the review and we are continuing to progress further opportunities mainly related to our non-integrated steel businesses."
In late 2008 Arrium made a tilt to buy the remaining stake in Steel & Tube, offering $4 a share, but later gave up when it became clear world markets were set to plunge.
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.
In August, Steel & Tube reported a 23% fall in annual profit to $13.1 million as dwindling demand and stiff competition squeezed margins. Sales rose 5% to $405.4 million.
Steel & Tube shares last traded at $2.42 and are up 17% this year. ASX-listed Arrium shares last trade at 78.7 Australian cents and have also gained 17% so far this year.