Pomina Steel suspends selling shares to strategic Japanese investor

Tuesday, Jan 30, 2024 17:57

A factory of Pomina Steel Joint Stock Company (Pomina). — Photo Pomina

The Board of Directors (BOD) of Pomina Steel Joint Stock Company (Pomina) has recently announced the suspension of the plan to privately sell shares to strategic investor Nansei Steel, previously approved in July 2023.

According to the plan announced in July, Pomina Steel had planned to privately issue 70.17 million shares to Japanese investor Nansei Steel at a proposed offering price of VNĐ10,000 (US$0.41) per share. The transaction would have given Nansei Steel a 20.4 per cent ownership stake in Pomina.

These shares were expected to be divided into two separate offerings, taking place in August 2023 and September 2024, respectively. The first offering would consist of 10.6 million shares, while the second offering would include the remaining 59.5 million shares.

Pomina also stated that the nearly VNĐ702 billion raised would be utilised to improve the company's financial status and provide additional working capital to restart the blast furnace, which had been closed since the third quarter of 2022.

At the annual general meeting held in July 2023, when the plan to privately sell shares to Japanese steel company Nansei Steel was announced, Inafuku Makoto, representative of Nansei Steel, stated that Nansei Steel had completed the signing of a basic agreement and deposited a sum of money to secure negotiation rights. However, both parties still needed to discuss strategies with relevant partners, mobilise bank funds and overcome other difficulties.

The announcement to temporarily suspend the plan took place just before the extraordinary general meeting to approve Pomina's restructuring plan. The last registration date to attend the general meeting is February 16, 2024. The company has not yet announced the date of the general meeting.

These actions occurred in the context of Pomina Steel facing multiple overlapping difficulties, including losses in its business operations, a massive amount of overdue debt, and a significant decline in stock prices.

Pomina Steel has experienced six consecutive quarters of losses, from the second quarter of 2022 to the third quarter of 2023, with a total after-tax loss of around VNĐ1.9 trillion. This loss has eroded the accumulated profits of Pomina Steel over several years. As of September 30, 2023, Pomina Steel had accumulated losses of over VNĐ868 billion Vietnamese đồng, equivalent to 31 per cent of its charter capital.

In 2022, due to a difficult market environment, high cost of goods sold and pressure from interest expenses, Pomina Steel incurred a net loss of VNĐ1.17 trillion. This was the company's record loss and the heaviest loss among steel companies in the market at that time. This situation continued in 2023 as the steel consumption market did not improve. Through the accumulated nine months, Pomina Steel incurred a net loss of VNĐ647 billion.

In addition to the unfavourable business situation, Pomina Steel also recorded a massive amount of overdue debt. In the 2023 interim audit report, Pomina Steel had VNĐ3.1 trillion of overdue debt, of which VNĐ2.2 trillion was borrowed debt and VNĐ922 billion was payable to suppliers. — VNS

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