It is reported that Shandong Steel matches its subsidiaries including Jinan Steel, Laiwu Steel and Rizhao Steel, into the material asset reorganization which just happened two months after the mill acquired 67% of Rizhao Steel and counterchanged GMs of Jinan Steel and Laiwu Steel.
The news arouses much attention from steel and steel-related industries. The common view is that the reorganization of Shandong Steel will be much harder than that of Hebei Steel, due to the complicated situations as follows
According to insiders of Shandong Steel, Jinan Steel and Laiwu Steel the two state owned steelmakers themselves are tepid on the reconstruction. Under the pressure of Shandong State owned Assets Supervision & Administration Commission, the two mills took part in the foundation of Shandong Steel Group on the surface but appeared litter material recombination in assets.
A researcher of Ministry of Commerce said “The material combination will be postponed for long. Rizhao Steel is said to be another problem before the whole reorganization, since the evaluation on Rizhao Steel-related assets freezes over and the negotiation, firstly designed to be finished in 180 days after September 6th is expected to be prolonged.”
On September 6th Shandong Steel officially signed regroup agreement with Rizhao Steel and took 67% stake of the later.
Mr Zhao Yongqin director of secretariat of Rizhao Steel introduced that “The negotiation refers to over 30 items of Rizhao Steel like assets, debts, creditor’s rights, personnel and land. Shandong Steel and Rizhao Steel sets up negotiation teams to talk over the detail items of the regroup.”
A source close to Rizhao Steel noted that “The talk isn’t smooth.” The rest 30% stake of Rizhao Steel and the arrangement of Rizhao Steel’s over 20,000 employees are the hottest potatoes.
Mr Jiang Qian chief researcher in energy sector of China Investment Corp said in short the final uncertainty in Shandong’s material assets reorganization will be the time problem. The reorganization responds to the state policies in neatening domestic steel industry.”
However, that will cost long time to realize the reorganization. Jinan Steel and Laiwu Steel both announced November 8th evening to stop share trading for the recombination. The close of share trading is supposed to last for at least one month and even overrun 4 months, the time Hebei Steel once spent.
Besides, Jinan Steel and Laiwu Steel both tried to be the leader of the reorganization. In August Laiwu Steel released its full listing plan and started to buy in shares of Jinan Steel at last became the sixth largest shareholder of the later by owning 7.6996 million shares.
In October Jinan Steel planed to raise about CNY 3 billion by private placement of about 650 million shares at price of CNY 4.48 per share. Many analysts said “Jinan Steel wants to be the survivor after the recombination.”
Mr Jiang noted that “It’s only a choice and the two subsidiaries are basically similar in sizes.”
According to the Q3 data, Jinan Steel and Laiwu Steel respectively recorded CNY 28.8 billion and CNY 16.2 billion of total assets, CNY 18.7 billion and CNY 20 billion of revenue and minus CNY 574 million and minus CNY 172 million of profits.
(Sourced from MySteel.net)
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