Tatas exit steel mill in MalaysiaStrategic move
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Calcutta, July 16: Tata Steel today sold off its entire stake in Malaysian steel mill Southern Steel Berhad for $72 million (Rs 337 crore) to another Malaysian firm Signaland Sdn Bhd.
The Indian company held a 27.03 per cent stake in Southern Steel through wholly owned subsidiary NatSteel Holdings Pte Ltd.
NatSteel was acquired by the Tatas in August 2004 for Rs 1,313 crore, or $282 million.
Six years later and after a much bigger acquisition of Anglo-Dutch steel maker Corus Group Plc, the Indian conglomerate has decided to cash in on an old investment.
“The sale is part of Tata Steel’s strategy of restructuring its portfolio and reconsidering its position in geographies where it does not have a majority control. The company will continue to explore various opportunities to grow its Southeast Asian business,” a Tata Steel statement said.
Koushik Chatterjee, chief financial officer of the Tata Steel group, was a director on the board of Southern Steel and Thachat Viswanath Narendran, vice-president of flat products and safety, served as his alternative.
Narendran had resigned from the Malaysian company on May 24.
Signaland Sdn Bhd’s banker Hong Leong Investment Bank informed local stock exchange Bursa Malaysia that it had bought NatSteel’s 113.38 million shares at 2.05 ringgit apiece.
Signaland Sdn Bhd, which now holds a 70 per cent stake in Southern Steel, has offered to buy the rest of the equity.
Corporate observers said the move by Tata Steel was an attempt to raise cash to cut debt. In the past, it had exited the non-core aluminium business that came along with Corus.
It is also in talks with a few prospective investors to sell Corus’s Teesside Cast Product plant in Redcar, UK. The loss-making facility is now closed.
The company’s net debt stood at $9.88 billion at the end of March 31 against $11.21 billion a year ago.
The Tata Steel announcement came after market hours. The scrip, however, closed at Rs 509.20, down Rs 2.10 on the Bombay Stock Exchange.
The Southern Steel stake sale comes a day after the company announced a preferential allotment of equity shares and convertible warrants to raise Rs 1,600 crore over the next 18 months.
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