October 12, 2008

JSW Steel board to decide on US acquisitions today

JSW Steel Limited informed BSE that a meeting of its board of directors will be held on August 21st 2007 for evaluating the feasibility of acquisition of plate mill, pipe mill and double jointing & coating facilities in the USA after taking into account the due diligence reports submitted by various reputed International Agencies.

As per media reports, the target companies would be Jindal Enterprises LLC, Jindal United Steel Corp and SAW Pipes USA. Jindal Enterprises LLC is a wholly owned subsidiary of PR Jindal group’s flagship Jindal Saw. Jindal Enterprises holds a 49% stake in Jindal United Steel Corp, which has a steel plate mill with an annual capacity of 1.2 million tonnes. A Jindal Saw subsidiary owns 19.47% stake in SAW Pipes USA, which has an annual capacity of 50,000 tonnes of steel pipes. Jindal Saw has toll conversion agreements with JUSC and SAW Pipes USA under which it provides the raw materials and these companies manufacture finished goods and charge a manufacturing or tolling fee. Jindal Saw markets these products through a Texas based branch.

Mr Sajjan Jindal had told Business Standard a fortnight ago that US acquisitions would be funded through a leveraged buy out, which entails financing an acquisition by leveraging the target company’s balance sheet. JSW sources said after the acquisition, the company would ship slabs from its Vijaynagar or proposed Bengal plant in India and then finish them at the rolling mills in the US.