Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


CORRECT: Fletcher to sell Pacific Steel to Bluescope

CORRECT: Fletcher to sell Pacific Steel for $120M to Bluescope

(Corrects to show net expense in third paragraph)

Feb. 17 (BusinessDesk) – BlueScope Steel, Australia’s largest steelmaker and owner of the New Zealand Steel mill, has agreed to buy assets of Fletcher Building’s Pacific Steel in a $120 million deal that will lead to the closure of Fletcher’s steel mill at Otahuhu at the end of 2015.

The transaction will leave BlueScope as the nation’s only steelmaker and requires approval from the Commerce Commission. The companies are aiming to complete the transaction in mid-2014.

Melbourne-based BlueScope will pay $60 million for Pacific Steel’s long-products rolling and marketing operations and pay about $60 million for the target’s working capital, according to a statement from Auckland-based Fletcher, which expects a one-time net expense of about $19 million.

Bluescope will pay half the $60 million price of the assets upfront and the remainder once it has commissioned a new billet caster, expected to be by the end of calendar 2015.

The Australian company will build the billet caster at the Glenbrook mill south of Auckland operated by its NZ Steel unit, spending about $50 million on the new plant, it said. Until then, Fletcher will continue to operate the Otahuhu mill and supply BlueScope with billet on commercial terms, Fletcher said.

“These are tiny plants on a world scale and this is how you allow manufacturing to survive here,” Philip King, Fletcher’s investor relations manager, told BusinessDesk. “The competition comes from imports.”

The shuttering of the Otahuhu mill is likely to see a jump in exports of scrap steel that used to be melted at the mill. BlueScope’s Glenbrook plant is essentially set up for iron sand processing. Fletcher owns 50 percent of scrap metal business Sims Pacific Metals.

The sale includes Pacific Steel’s rolling mill and wire drawing facilities at Otahuhu and its Fijian rolling mill. Once Bluescope’s billet caster is running, NZ Steel will supply billet to the rolling mills at Otahuhu and in Fiji.

The deal “will help make the New Zealand steel industry more sustainable,” said BlueScope chief executive Paul O’Malley. “The acquisition of the PSG downstream assets is an opportunity to better leverage our low cost iron sands and better serve customers with a full range of long products, together with our existing flat products.”

Fletcher chief executive Mark Adamson said most of the Pacific Steel rolling mill and wire drawing workers will be offered work by BlueScope. The deal doesn’t affect ownership of Fletcher’s steel distribution business, Fletcher Easysteel, or its reinforcing business, Fletcher Reinforcing.

Fletcher shares rose 1.1 percent to $9.58 on the NZX and are up 6.4 percent in the past 12 months. Bluescope was last at A$5.93 on the ASX, having soared 56 percent in the past 12 months.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Insurers Up For More Payouts: Chch Property Investor Wins Policy Appeal In Supreme Court

Ridgecrest NZ, a property investor, has won an appeal in the Supreme Court over insurance cover provided by IAG New Zealand for a Christchurch building damaged in four successive earthquakes. More>>

ALSO:

Other Cases:

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news