Steel Asia Manufacturing Corp. is looking to bring in investors as it gears up for a massive P65-billion expansion program, executive vice president Rafael Hidalgo said over the weekend.
Hidalgo said to fund the expansion plan for new product lines, the company is willing to sell a minority stake, potentially reaching up to 40 percent of total ownership.
“We are open to new investors coming in. Majority ownership should remain with SteeAsia. A [local] steel company should always be Filipino-owned,” he said.
Hidalgo, however, remained tight-lipped about potential investors, revealing that discussions were ongoing with several interested parties, including a Filipino consortium.
The expansion will be funded through a combination of investor equity and loans, he said.
Half of the targeted investments will go to Candelaria Works in Quezon province where a facility to manufacture heavy sections is expected to rise, requiring P30 billion in capital outlay.
The P65-billion investment package also includes the construction of a dedicated pipeline for medium section which will be housed at the 500,000-metric-ton (MT) Lemery Works in Batangas; a rebar plant in Concepcion, Tarlac with a 1.2 billion MT rolling capacity; a wire rod facility with a capacity of 500,000 MT; and the Davao Meltshop which can produce 500,000 MT of billets.
Hidalgo said the Lemery plant secured financing through a mix of equity and loans secured from the Government Service Insurance System (GSIS), the Development Bank of the Philippines (DBP) and the Philippine Business Bank.
The expansion will double the company’s production capacity to 6 million MT annually from 3 million MT and increase the availability of locally-manufactured steel to 70 percent.
The company is aiming to finalize the investment deal within the next 12 months.
NatSteel Holdings Pte Ltd of Singapore had a 40-percent stake in SteelAsia in 1996, but the shares were sold to the Tata Group of India.
SteelAsia reacquired full control of the company after the Indian Tata Group divested its shares in Southeast Asia in 2010.