Millcon Steel seeks fixed assets of TSSI
Play
Move will propel firm's 2012 sales to Bt20 bn
Millcon Steel Industries expects its sales next year to leapfrog to Bt20 billion instead of Bt16 billion if it can buy the fixed assets of Thai Special Sheet Industry (TSSI).
It projects sales of Bt14 billion this year.
Millcon’s board of directors has endorsed the purchase of TSSI’s assets for Bt3.06 billion. Millcon will next ask shareholders on November 11 to approve its plan to raise capital by Bt1.5 billion and seek loans of Bt1.5 billion to fund the acquisition.
Chief executive Sittichai Leeswadtrakul said the logic behind the move was to feed its Green Mill Project’s special quality billets to TSSI to produce special quality wire rods, which would increase its profitability.
The entire billet output of the Green Mill Project will be shipped to Millcon but only 300,000-400,000 tonnes per year of the Green Mill’s annual capacity of 500,000 tonnes will be used. The remaining capacity of 100,000-200,000 tonnes should be developed as a new product.
Domestic demand for wire rods is 1.3 million tonnes per year, of which 800,000 tonnes are imported.
The focus on this product will reduce the company’s risk, since the wire-rod market is less volatile than the rod market and can add value to the company.
TSSI stopped operating in 2007 because of financial problems. Its plant can produce 500,000 tonnes of wire rods per year. Millcon will buy only TSSI’s land and machinery. After receiving the nod from shareholders, it will spend three months on upgrading machines and start operating after that.
Sittichai said he had studied the deal for years and was convinced the Green Mill and TSSI projects could complement each other.
