SSI going through debt restructuring
Sahaviriya Steel Industries and three major creditors have agreed to start the debt restructuring process, after its subsidiary in the UK suffered from financial woes and had to suspend the operations of the Teesside plant.
In a statement, Win Viriyaprapaikit, SSI Group CEO, said that the plant was suspended pending for negotiation with the government on steel manufacturing cost in the UK.
SSI bought the plant in 2011 from Tata Steel. Sahaviriya Steel Industries UK was established to operate the plant, which recommenced the operations in 2012.
Win said that cost-reduction programmes have been carried out since, but since the fourth quarter of 2014 oversupplies have dampened the market. Due to economic slowdown in China and Russia, steel manufacturers in the countries shifted focus to exports.
"Steel price has fallen by over 40 per cent from over US$500 per tonne in 2014 while the cost has been cut by only 30 per cent," Win said.
The debt restructuring deal was struck as SSI could not repay loans to Siam Commercial Bank, Krungthai Bank and Tisco Bank. All the banks have also set full provisions against loans to the group.
SSI owes a total of it owes a total of Bt50 billion to SCB, KTB and Tisco Bank: Bt22 billion belonging to SCB, Bt22 billion to KTB and Bt4.4 billion to Tisco. Of total, US$790 million Bt28 billion was extended to its subsidiary, SSI UK, which has suspended operations on September 18. SSI was the loan guarantor.
SSI showed a combined net loss of nearly Bt29 billion in the past four years: Bt981 million in 2011, Bt15.9 billion in 2012, Bt7 billion in 2013 and Bt4.9 billion in 2014. In the first half of this year, net loss amounted to Bt6.26 billion.
Teesside is one of the biggest steel plants in the UK.
The share prices of Siam Commercial Bank and Krungthai Bank dropped Monday following the reports that their major customer, Sahaviriya Steel Industries, will have to come under debt restructuring.
SSI owes a total of it owes a total of Bt50 billion to SCB, KTB and Tisco Bank: Bt22 billion belonging to SCB, Bt22 billion to KTB and Bt4.4 billion to Tisco. Of total, US$790 million Bt28 billion was extended to its subsidiary, SSI UK, which has suspended operations on September 18. SSI was the loan guarantor.
At 4.31pm, SCB share price was down by 2.08 per cent to Bt141 and KTB was down by 2.20 per cent to Bt17.80. Tisco Financial Group, the major shareholder of Tisco Bank, was unchanged at Bt36.75. On Friday, it closed at Bt0.10, down by 9 per cent from the previous day.
The SET index gained 0.15 per cent from Friday to 1,3912.40.
