The Hindu : Business : Tata Steel to buy Thai steel firm

Online edition of India's National Newspaper
Friday, Dec 16, 2005

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Business

Tata Steel to buy Thai steel firm

Special Correspondent

Total deal will involve an outlay of $175m

KOLKATA: Tata Steel Ltd (TSL) on Thursday announced the signing of `definitive agreements' to acquire majority shares in Millennium Steel Company (MSC) in Thailand at an initial cost of $138 million.

Making this announcement, soon after flying into the city from Bangkok, Tata Steel Managing Director, B. Muthuraman, said that under the terms of the agreement, CementThai Holding Company (CHC), the largest shareholder of MSC (with a 40 per cent equity stake), had committed to sell its shares into a voluntary tender offer that Tata Steel would make for all of the equity and preference shares of MSC, subject to certain conditions. These include shareholder and creditor approvals for issuance of new shares equivalent to 24.99 per cent stake in the expanded capital of MSC and amendment of MSC's articles of association to enable 100 per cent foreign ownership.

Mr. Muthuraman said the Tatas were keen on acquiring finished steel facilities in Southeast Asia and the 1.7 million tonne capacity long products plant fitted well into TSL's plans to expand capacity to 15 million tonnes by 2010. This is to be achieved through a mix of expansion of the existing five million tonnes capacity at Jamshedpur, greenfield projects in India and overseas, and acquisitions. The company acquired NatSteel in Singapore in August 2004 and is readying DPRs (detailed project reports) for projects in Orissa, Chhattisgarh and Jharkhand. With the acquisition of MSC, Tata Steel's capacity touches 8.7 million tonnes. "The aim is to become a global company," Mr. Muthuraman said.

Koushik Chatterjee, Vice President-Finance, TSL, said the enterprise value of MSC had been pegged at $404 million, including $175 million of equity and $229 million of debt. The Tatas would first infuse 25 per cent additional equity to take its holding in MSC to a majority one by March 2006, before making an open offer to mop up the remaining shares at baht 1.15 per share. The total deal would then involve an outgo of $175 million for acquiring 100 per cent of the share of MSC and would be funded through internal accruals.

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