By Andrea Hotter & Devon Maylie
Tata Steel Ltd. said Thursday its U.K. arm agreed to sell certain assets of Teesside Cast Products to a unit of Thailand's Sahaviriya Steel Industries PCL for $469 million as part of the Thai company's effort to ramp up production.
The plant was partially shut last February after four steel slab buyers pulled out of a joint 10-year contract. The deal is expected to be completed by the end of March and SSI said it plans to restart production by the end of the year.
SSI said it plans to spend $1 billion on the plant in the next two years, including the $469 million to buy the plant and $150 million to improve efficiency at the plant.
SSI, which has previously purchased slab from Teesside, intends to ship steel back to its own four million tons-a-year operation in Thailand and ramp output back up to 3.5 million metric tons of slab, which Teesside was producing before 2008.
"We buy from Brazil and Russia and the shipping distance is similar," said Win Viriyaprapaikit, president of SSI, adding many of the raw materials are also in the Atlantic basin so will be easy to ship to the plant.
"We are in discussions with several raw material suppliers to put in place a long-term supply agreement," he said.
SSI is also considering listing in the U.K., but Mr. Viriyaprapaikit said no decision had been made yet.
Thai lenders Siam Commercial Bank PCL, Krung Thai Bank PCL, and Tisco Bank PCL signed two credit facility agreements worth a combined $1.38 billion with SSI to support the purchase. Of the total, 23.9 billion Thai baht ($781 million) is a committed working capital and term loan facility for Sahaviriya and another $600 million is a facility for Sahaviriya Steel Industries U.K. Ltd., the bank said in a statement.
(sourced:online.wsj.com)
The plant was partially shut last February after four steel slab buyers pulled out of a joint 10-year contract. The deal is expected to be completed by the end of March and SSI said it plans to restart production by the end of the year.
SSI said it plans to spend $1 billion on the plant in the next two years, including the $469 million to buy the plant and $150 million to improve efficiency at the plant.
SSI, which has previously purchased slab from Teesside, intends to ship steel back to its own four million tons-a-year operation in Thailand and ramp output back up to 3.5 million metric tons of slab, which Teesside was producing before 2008.
"We buy from Brazil and Russia and the shipping distance is similar," said Win Viriyaprapaikit, president of SSI, adding many of the raw materials are also in the Atlantic basin so will be easy to ship to the plant.
"We are in discussions with several raw material suppliers to put in place a long-term supply agreement," he said.
SSI is also considering listing in the U.K., but Mr. Viriyaprapaikit said no decision had been made yet.
Thai lenders Siam Commercial Bank PCL, Krung Thai Bank PCL, and Tisco Bank PCL signed two credit facility agreements worth a combined $1.38 billion with SSI to support the purchase. Of the total, 23.9 billion Thai baht ($781 million) is a committed working capital and term loan facility for Sahaviriya and another $600 million is a facility for Sahaviriya Steel Industries U.K. Ltd., the bank said in a statement.
(sourced:online.wsj.com)
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