More of Wellington steel distributor Steel & Tube is back in New Zealand hands after Australian cornerstone shareholder Arrium sold its 50.3 per cent stake to pay down some of its significant debt.
ASX-listed Arrium, a mining and minerals company spun out of BHP Billiton that changed its name from OneSteel in May, was more than A$2 billion (NZ$2.5b) in the red in June.
It raised A$72.9 million from its Steel & Tube holdings, which were sold to a broad range of institutional and retail investors for NZ$2.05 a share yesterday.
ACC now holds 7.2 per cent of Steel & Tube after spending more than $12m to buy 6 million shares.
The broking firm behind the deal, Craigs Investment Partners, sold all Arrium's shares in just two hours, showing investor confidence in the stock despite New Zealand steel consumption being slashed by about a third, at 665,000 tonnes a year, down from a peak of 970,000 tonnes seven years ago.
The sale of Arrium's shares was heavily discounted from the $2.42 Steel & Tube began trading at on the New Zealand main bourse yesterday. It closed down 8.3 per cent at $2.22.
Craigs Investment Partners' head of equity capital markets, John Moore, said its analysts had a positive view of the stock, driven by the Christchurch rebuild.
Although it processed the sale swiftly yesterday, Craigs had been in touch with Arrium about it for some time.
"But really, the whole thing happened yesterday.
"We proposed to them during the course of the day that we could place the entire amount of their Steel & Tube stock and proposed a fixed price that we were prepared to underwrite," he said. "Absolutely critical to getting the deal done was having retail in there because the institutional pool is only so large."
Although the sale price was at a 37 cent discount to its price on the sharemarket at the time, Moore said that it had to take into account the fact it was "a big chunk" of the firm and a transformational event.
Steel & Tube chief executive Dave Taylor said the sale would not affect day-to-day operations for the Lower Hutt company, which made a net profit of $13.1m in the year to June.Fairfax NZ
- © Fairfax NZ News
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