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

 

Half Empty: Fonterra's 2017 Opening Forecast Below Expectations

Fonterra Cooperative Group raised its forecast farmgate milk payout for next season by less than expected as the world's largest dairy exporter predicts lower prices will crimp production and supply will pick up. The New Zealand dollar fell. More>>

ALSO:

Pest Control: Mouse Blitz Team Leaves For Antipodes

The Million Dollar Mouse project to rid Antipodes Island of mice is underway with the departure of a rodent eradication team to the remote nature reserve and World Heritage Area. More>>

Gongs Got: Canon Media Awards & NZ Radio Awards Happen

Radio NZ: RNZ website The Wireless, which is co-funded by NZ On Air, was named best website, while Toby Manhire and Toby Morris won the best opinion general writing section for their weekly column on rnz.co.nz and Tess McClure won the best junior feature writer section. More>>

ALSO:

Pre-Budget: Debt Focus Risks Losing Opportunity To Stoke Economy

The Treasury is likely to upgrade its forecasts for economic growth in Budget 2016 next week but Finance Minister Bill English has already signalled that more of his focus is on debt repayment than on fiscal stimulus or tax cuts... More>>

ALSO:

Fulton Hogan's Heroes: Managing Director Nick Miller Resigns

Fulton Hogan managing director Nick Miller will leave the privately owned construction company after seven years in charge. The Dunedin-based company has kicked off a search for a replacement, and Miller will stay on at the helm until March next year, or until a successor has been appointed and a transition period completed. More>>

ALSO:

Gordon Campbell: On Electricity, Executions, And Bob Dylan

The Electricity Authority has unveiled the final version of its pricing plan for electricity transmission. This will change the way transmission prices (which comprise about 10% of the average power bill) are computed, and will add hundreds of dollars a year to power bills for many ordinary consumers. More>>

ALSO:

Half Empty: Fonterra NZ, Australia Milk Collection Drops In Season

Fonterra Cooperative Group says milk collection is down in New Zealand and Australia, its two largest markets, in the first 11 months of the season during a period of weak dairy prices. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news