Thai Group To Buy Mothballed Corus Plant
Unions have welcomed the news that a steel plant mothballed earlier this year with the loss of 1,000 jobs is to be sold to a Thai company.
https://teakdoor.com/images/smilies1/You_Rock_Emoticon.gif Unions say move will generate 'wealth and opportunity' in the region
SSI, the biggest steel producer in Thailand, said it had signed a memorandum of understanding with Corus to buy the Teesside Cast Products facility for £321m.
Unite national officer Terry Pye said: "Last year this site was pronounced dead but thanks to the intervention and determination of the workforce and their unions to find a buyer, this steel plant has been brought back to life.
"The deal secures jobs for the future and generates wealth and opportunity for the local community. This is fantastic news."
The site was partially closed when an international consortium walked away from a long-term contract to buy its products.
More than 1,000 workers lost their jobs and there were fears that the plant would shut for good, putting thousands more out of work across the region.
https://teakdoor.com/images/smilies1/You_Rock_Emoticon.gif Corus says deal is expected to create a 'significant' number of new jobs
Corus said the it hoped the deal would see steel production resume on Teesside in the first half of next year.
Chief executive Kirby Adams said: "We are very pleased to announce this significant progress in our long-held objective to sell the TCP assets to a strategic industry investor.
"This is the first of several steps required to reach a definitive sale agreement in the coming months which, with the anticipated co-operation of Government, employee representatives and the North East community, should result in the restart of steel-making on Teesside in the first half of 2011."
SSI said it was finalising the details and arranging financing for the proposed acquisition.
The group said the deal would allow it to become "a fully-integrated steel producer with both melting and rolling facilities".
SSI president, Win Viriyaprapaikit, said: "We have great respect for the tradition of steel-making on Teesside and for the highly-skilled Teesside workforce, having previously purchased slab from Teesside Cast Products."
Unions Welcome News Thai Group SSI Is To Buy Mothballed Corus Steel Plant On Teeside | Business | Sky News
Thai steelmaker starts raising funds to buy Corus plant
Redcar steel plant a step closer to coming out of mothballs
• Thai steelmaker starts raising funds to buy Corus plant
• Up to 1,000 could be re-employed on Tees
Phillip Inman
guardian.co.uk, Monday 27 December 2010 19.47 GMT
The Redcar blast furnace plant, which is currently mothballed. Thailand's Sahaviriya Steel Industries is raising funds in a rights issue and private placement to help finance its purchase. Photograph: Gary Calton
A plan to unwrap the mothballed Corus steel plant on Teesside and re-employ up to 1,000 workers came a step closer tonight after Thailand's main steel producer said it had started to raise part of the £400m it needs to buy the business.
Sahaviriya Steel Industries (SSI) told investors it would raise about 6 billion baht (£127m) in a rights issue and private placement to help finance its purchase of the Redcar plant.
The Thai company agreed in August to buy the plant from steelmaker Corus, owned by India's Tata Steel, to boost its position in the global steel market.
Unions representing former workers at the plant were expected to welcome the plans after talks with the proposed new management revealed a need to re-employ between 800 and 1,000 of the plant's 2,000 former staff.
Corus, Europe's second-largest steelmaker, had mothballed the plant in February after failing to find a long-term partner for its output. A preliminary agreement in 2009 with two members of the four-strong consortium that bought the plant's output, Italian steelmaker Marcegaglia and South Korea's Dongkuk, collapsed after months of wrangling.
The two firms had agreed to buy an 80% stake in the unit, valuing it at an estimated £480m. Under the memorandum of understanding, they were due to take a majority holding in the operation, which produces steel slab, leaving Corus with a minority stake.
At the time of the deal, Corus cut 2,500 jobs in the UK at Llanwern and Port Talbot in south Wales as well as at Rotherham and Stocksbridge in Yorkshire. No mention was made of the 2,000 workers at Teesside because of the planned sale.
The closure was described as "devastating" by union leaders and local councils for the effect it would have on local employers and shops once the jobs were lost.
Since the summer, talks with SSI have progressed, with several constructive meetings between union officials and SSI management.
The Thai company said it expected to complete the financing by February and open the plant again by the summer. SSI's president, Win Viriyaprapaikit, said: "After the fundraising, the acquisition should be completed in the first quarter of 2011."
SSI has said the deal would enable it to fulfil its longstanding objective of becoming a fully integrated steel producer with both primary steelmaking and rolling facilities. It expected the acquisition to help boost its production and sales to 3m tonnes in 2012, reducing production costs and increasing its competitiveness.
"After the completion of the purchase, we expect the plant to be able to produce slab for SSI within six months. We are confident that sales and production should increase to 3m tonnes in 2012," Win said.
However, SSI investors gave the announcement a lukewarm reception.
To operate the plant, SSI is looking for loans worth about $650m (£420m), including $200m for working capital, Win said. "All the funding will boost our debt-to-equity ratio to 2.0 from 1.0 now," he added.
Worries about the rise in debt pushed shares in SSI, valued at $634m on the bourse, down to the lowest in a month at 1.43 baht, 2% lower than Friday.
Redcar steel plant a step closer to coming out of mothballs | Business | The Guardian