Tata Steel calls off $327-million S-E Asian asset sale to China's HBIS
07 August 2019
Tata Steel has called off a planned $327-million sale of its Southeast Asian assets to China’s HBIS due to regulatory hurdles and has proposed to immediately begin engagement with other investors to find a partner for the South-East Asian business.
Tata Steel subsidiary TS Global Holdings’ bid to sell off its struggling overseas subsidiaries Tata Steel (Thailand) Public Company and NatSteel Holdings Pte has hit a roadblock due to delay in getting regulatory approvals.
On Tuesday, TS Global Holdings said it had terminated the definitive agreement signed with HBIS Group Co to divest its equity stake in Tata Steel (Thailand) Public Company and NatSteel Holdings Pte for $327 million.
According to the agreement signed in January, HBIS was to acquire 70 per cent stake in both the companies and the rest to be owned TSGH. The completion of the deal would have helped transfer major portion of its debt in South-East Asia business to the new joint venture company. The transaction was subject to regulatory approvals.
On Tuesday, Tata Steel said, “We have been informed by HBIS that they have not been able to procure the requisite approvals from the Hebei government ( Northern China province), one of the key conditions precedent for the proposed transaction.”
Both parties have, therefore, decided not to extend the definitive agreements, it added.
Following the development, Tata Steel will immediately begin engagement with other investors in continuation of its strategy to find a partner for the South-East Asian business, it added. The sale of assets was aimed at trimming its debt of over Rs1-lakh crore.
This is the second time that Tata Steel has failed in divesting loss-making global assets after the European Commission in May rejected the company’s plan to merge its loss-making European operations with German conglomerate Thyssenkrupp.
The company now plans to operate the facilities to keep it in going concern rather than idling it. But, according to sources close to the company, the EC move could be a blessing in disguise as Tata Steel is hoping to get $2 billion cash flow from the European assets over the next few years.
In Southeast Asia, Tata Steel plans to concentrate its efforts in growing its value-added products and services portfolio throughout the region, while strengthening its key steel operations in Singapore, Thailand and Vietnam.
NatSteel’s product range includes reinforcement bars (Rebars) and wire rods, cut-and-bend reinforcement bars, welded wire mesh, pre-fabricated cages (pre-cages), steel couplers and carpet reinforcement.
NatSteel Holdings is the market leader in construction steel with over 40 per cent market share and a pioneer in driving the adoption of offsite fabricated reinforcement solutions to improve site productivity and safety in Singapore.