Pomina Steel Announces Business Restructuring and Factory Reinvestment
Steel NewsDate: 27-02-2024 by: Nhu Quynh
Recently, Pomina Steel plans to consider increasing the investment level of the Pomina 3 blast furnace project to VND 5,800 billion. At the same time, the company wants to establish a new legal entity with a strategic investor to comprehensively restructure the business.
Pomina Steel Joint Stock Company has just announced the 2024 Extraordinary General Meeting of Shareholders documents with some notable content. Specifically, this steel manufacturer will submit to shareholders for review and approval of the settlement approval proposal and increase the blast furnace investment at Pomina 3 by more than 904 billion VND to nearly 5,880 billion VND. This additional adjustment is equivalent to an increase of 18% compared to the initial expected investment level. Pomina Steel Board of Directors requests shareholders to review, approve, and approve the above proposal so that the company can complete the project procedures.
The Pomina 3 blast furnace has been deployed since 2019 and put into production in February 2012. Currently, according to the fourth quarter 2023 financial report, Pomina Steel recorded costs of up to 5,808 billion VND (accounting for more than 55% of total corporate assets) to implement the blast furnace and EAF furnace projects.
In addition, Pomina Steel plans to submit to shareholders a comprehensive restructuring plan for Pomina through cooperation with strategic investors to establish a new legal entity, Pomina Phu My Joint Stock Company. In particular, Pomina Steel will contribute capital in kind to all land, factories, and equipment lines. Strategic investors contribute capital in cash. Strategic investors, charter capital, and ownership structure are expected to be presented specifically at the congress. Pomina Steel said that the strong restructuring, especially with the participation of strategic investors, is a milestone, marking an important turning point for the company. This strategic cooperation will provide the necessary capital for the company to restart the steel billet blast furnace. It is expected that Pomina Steel will operate the blast furnace again in the fourth quarter of 2024 after a period of shutdown to anticipate the return of real estate projects that are expected to recover strongly in the last months of the year.
Previously, at the end of January 2024, Pomina Steel announced the temporary suspension of its plan to privately issue more than 70 million shares (equivalent to 20% of the company's charter capital) at a price of 10,000 VND per share to investors. Nansei Steel Strategy (Japan). These shares will be restricted from transfer for 3 years. Pomina Steel once expected to earn about 700 billion VND from the above capital sale deal to restructure and supplement capital for business activities.
2023 was be an unfavorable business year for Pomina Steel, recording revenue of 3,281 billion VND, down 74.6% compared to 2022 and continuing to report a net loss of 960 billion VND compared to a reported loss of nearly 1,167 billion VND. in 2022. Thus, Pomina's total accumulated loss has reached nearly 1,271 billion VND, equivalent to 45.4% of equity. This is also the highest loss during the business's 25 years of operation.
Pomina Steel's board of directors said the cause of the loss was mainly due to weak consumer demand, a sharp decline in steel prices, and the high fixed costs of the newly put into operation blast furnace project. Besides, the use of high financial leverage also "erodes" the profits of this steel company.
Currently, Pomina Steel has three construction steel billet and rolling mills with a total capacity of 2.6 million tons. Of which, steel billet refining capacity is 1.5 million tons per year, and construction steel rolling capacity is 1.1 million tons. Pomina Steel currently focuses mainly on construction steel, with the key market being the southern provinces.
