ASX-listed mining and minerals group Arrium plans to sell its 50.3 per cent 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 & Tubestake at $2.05 a share, it said in a statement. That's a 15 per cent 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 cut 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 said. "The sale builds on approximately AU$120 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 A$1 billion t bid by an Asian consortium Steelmakers Australia last week, that was 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 per cent fall in annual profit to $13.1 million as dwindling demand and stiff competition squeezed margins. Sales rose 5 per cent to $405.4 million.
Shares in Steel & Tube last traded at $2.42 and are up 17 per cent this year. ASX listed Arrium shares last trade at 78.7 Australian cents and have gained 17 per cent so far this year.
