JSW Steel has acquired three companies in the US for $900 million to expand its geographical footprint. The target companies are Jindal United Steel Corporation, Saw Pipes, USA and Jindal Enterprises LLC.
These have 1.2 million net tonne of plate mill, 0.55 million net tonne of pipe mill and 0.35 million net tonne of double jointing and coating lines. These facilities are strategically located near a deep-water port, central to Gulf of Mexico oil and gas industries.
With this acquisition, JSW would get an entry point into growing and booming oil & gas sector in North America. The company would enhance the income accretive business model for immediate access to customers and markets through product diversification, market diversification and geographical diversification.
On completion of due diligence, JSW Steel will acquire 90% stake at an approved enterprise valuation and the balance 10% will be retained by some of the existing shareholders.
The acquisition price of $900 million works out to 6.25 times of the EBIDTA for 2006-07 (Apr-Mar) and is comparable with the transaction EBIDTA multiple of 4.7 to 14.8 times for similar transaction in the steel industry internationally, the company said in a notice to BSE.
According to Seshagiri Rao, director-finance, the funding required for completing this acquisition of 90% stake including working capital, will be $940 million, which will be financed by a foreign currency debt of $380 million to be raised against the guarantee of JSW Steel and the balance $560 million to be raised in the target company.
The company has flexibility of shifting part of the recourse debt to the extent of $230 million to the target company once the debt to EBIDTA covenant is complied with.
JSW Steel will form wholly owned subsidiaries or step down subsidiaries in Netherlands and US to raise finances and make investments to acquire the 90% stake. The companies will be merged into one single operating entity in US through a scheme of merger.
Meanwhile, the JSW group has approved setting up six modules of 500 tph beneficiation plant producing 15 mtpa of beneficiated ore at an estimated cost of Rs 850 crore. The project cost is proposed to be financed by way of term loan of Rs 500 crore, and the balance out of cash accruals. The payback period is expected to be 12 months.
(source: Economic times)
Showing posts with label Steel. Show all posts
Showing posts with label Steel. Show all posts
Tuesday, August 21, 2007
Friday, July 13, 2007
Indonesian invite for Tata Steel
The Indonesian government has invited Tata Steel and Arcelor Mittal to take part in the privatisation process through which the government is selling 35 per cent in PT Krakatau Steel.
Confirming this, sources said talks are at a preliminary stage. A spokesperson for Tata Steel, the world’s sixth largest steel maker, said the company has not approached anyone to acquire a stake in Krakatau Steel.
The broad contours of the plan suggest that the government will dilute another 30 per cent through a public offer later.
The proposed privatisation plan is a part of the government’s aim to scale up the country’s annual steel production capacity to 10 million tonne in three years from 6 million tonne now. For this, the government wants Krakatau to increase its capacity to 4 million tonne from the existing 2.5 million .
(Source: Business Standard)
Confirming this, sources said talks are at a preliminary stage. A spokesperson for Tata Steel, the world’s sixth largest steel maker, said the company has not approached anyone to acquire a stake in Krakatau Steel.
The broad contours of the plan suggest that the government will dilute another 30 per cent through a public offer later.
The proposed privatisation plan is a part of the government’s aim to scale up the country’s annual steel production capacity to 10 million tonne in three years from 6 million tonne now. For this, the government wants Krakatau to increase its capacity to 4 million tonne from the existing 2.5 million .
(Source: Business Standard)
Essar Steel bidding for Stelco
Essar Global, the overseas investment arm of the Essar Group, has been shortlisted along with two other bidders for the acquisition of North American steel maker Stelco. The other two companies in the race are Metinvest of Ukraine and Russian steel maker OAO Severstal.
Going by its stock price, the acquisition of Stelco could cost over $700 million (Rs 2,800 crore).
Stelco is one of the largest Canadian steel producers with 4,300-odd employees and an estimated 16 per cent share of the domestic market. It has two steel making units with 4.8 million tonnes of raw steel production capacity, four steel processing facilities and ownership in three iron ore mines which have combined reserves of 480 million tonnes for a reserve life of over 25 years.
Industry experts said a Stelco acquisition would help the Essar Group cater to the North American automotive industry better as more than half of Stelco’s shipments are meant for the automotive industry. An auto capacity of nearly 3 million vehicles a year is located in the vicinity of Stelco units.
A successful acquisition of Stelco would mean the third purchase by the Essar Group. It recently acquired Canadian steel maker Algoma, which supplies sheets to US car makers, including General Motors and Ford, in an all-cash deal of $1.6 billion (Rs 6,400 crore).
It also purchased Minnesota Steel, a US-based privately held company, for Rs 200 crore. The group is also investing $1.65 billion to develop the foreign company’s iron ore reserves of 1.4 billion tonne.
(Source: Business Standard )
Going by its stock price, the acquisition of Stelco could cost over $700 million (Rs 2,800 crore).
Stelco is one of the largest Canadian steel producers with 4,300-odd employees and an estimated 16 per cent share of the domestic market. It has two steel making units with 4.8 million tonnes of raw steel production capacity, four steel processing facilities and ownership in three iron ore mines which have combined reserves of 480 million tonnes for a reserve life of over 25 years.
Industry experts said a Stelco acquisition would help the Essar Group cater to the North American automotive industry better as more than half of Stelco’s shipments are meant for the automotive industry. An auto capacity of nearly 3 million vehicles a year is located in the vicinity of Stelco units.
A successful acquisition of Stelco would mean the third purchase by the Essar Group. It recently acquired Canadian steel maker Algoma, which supplies sheets to US car makers, including General Motors and Ford, in an all-cash deal of $1.6 billion (Rs 6,400 crore).
It also purchased Minnesota Steel, a US-based privately held company, for Rs 200 crore. The group is also investing $1.65 billion to develop the foreign company’s iron ore reserves of 1.4 billion tonne.
(Source: Business Standard )
Sunday, June 24, 2007
Jaiprakash group bids for Malvika Steel
Financial institutions seem to have finally found a taker for Malvika Steel with the New Delhi-based Jaiprakash group bidding for the company.
The Debt Recovery Tribunal (DRT) has put the Vinay Rai-promoted Malvika Steel under the hammer to clear off the over Rs 1,200 crore outstandings due to institutions led by IFCI.
Jaiprakash Industries’ managing director Manoj Gaur confirmed that his group has bid for the assets of Malvika. Although the size of his bid could not be ascertained, industry experts said Rai could not be contacted.
DRT could receive nearly Rs 600 crore from the unit, which has a sprawling plant with 740 acres in northern India.
It was not confirmed whether there is any second bid for Malvika. The country’s largest steel company, Steel Authority of India had previously expressed interest in acquiring the Amethi-based company. But its consultant Mecon advised against acquiring the entire assets of the company.
(Source: Business Standard )
The Debt Recovery Tribunal (DRT) has put the Vinay Rai-promoted Malvika Steel under the hammer to clear off the over Rs 1,200 crore outstandings due to institutions led by IFCI.
Jaiprakash Industries’ managing director Manoj Gaur confirmed that his group has bid for the assets of Malvika. Although the size of his bid could not be ascertained, industry experts said Rai could not be contacted.
DRT could receive nearly Rs 600 crore from the unit, which has a sprawling plant with 740 acres in northern India.
It was not confirmed whether there is any second bid for Malvika. The country’s largest steel company, Steel Authority of India had previously expressed interest in acquiring the Amethi-based company. But its consultant Mecon advised against acquiring the entire assets of the company.
(Source: Business Standard )
Saturday, June 23, 2007
Kalyani Steel forges JV with Gerdau of Brazil
Pune-based Kalyani Steel (KSL), makers of carbon and alloy steel, has entered into a joint venture agreement with Gerdau SA of Brazil. Both the companies will hold 45% each in the venture with the balance 10% being held by investors.The joint venture will hike the capacaity of SJK Steel, which was acquired recently by Kalyani Steel, from the current 2,75,000 tonne to 1.6 million tonne in the next few years.
The Gerdau Group is currently the 15th largest international steel producer with revenue of Brazillian$ 27.5 billion and presence in 12 countries.
(Source: Business Standard)
The Gerdau Group is currently the 15th largest international steel producer with revenue of Brazillian$ 27.5 billion and presence in 12 countries.
(Source: Business Standard)
Saturday, June 9, 2007
Essar set to acquire Canada-based Algoma
Essar Global has received approval from the Canadian government for acquisition of Algoma Steel for Canadian $1.85 billion (Rs 7,100 crore), as required under the country's foreign- investment rules.
(Source: Business Standard)
(Source: Business Standard)
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