BEIJING, Jan. 5, 2016 /PRNewswire/ -- General Steel
Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI),
announced today that on December 30,
2015, the Company signed a series of restructuring
agreements to effect the sale of its steel manufacturing
business.
Due to persistently depressed market trends for the steel
business in China, the Company's
steel manufacturing business had repeatedly suffered heavy net
losses in recent years, and as the depressed market is expected to
prolong in 2016 it is estimated that the steel manufacturing
business will continue to further deplete the Company's working
capital. The Company and its Board, as previously announced, had
thoroughly evaluated strategic alternatives and been exploring
optimal solutions for the divesture of its steel manufacturing
business.
On December 30, 2015, the Board
approved the Company's entering into an agreement to sell its
wholly-owned General Steel (China)
Co., Ltd. and its entire equity interest in Shaanxi Longmen Iron
and Steel Co., Ltd. for $1 million to
an affiliate of Victory Energy Resource Limited, a HK registered
company indirectly-owned by Henry
Yu, the Company's Chairman. Comparatively, the net equity of
the assets and liabilities included in the transaction was
negatively valued by a third party.
Through the transaction, the Company expects to receive a net
working capital injection of $1
million, and realize a reversal of equity deficiency of
approximately $1.6 billion,
benefiting from a large reduction in total liabilities. The
transaction will also save the Company from incurring future losses
and obligations from steel manufacturing.
After the sale, the Company plans to focus on accelerating its
cleantech business via its 84.5% equity ownership in Catalon
Chemical Corp. ("Catalon"), which develops and manufactures De-NOx
honeycomb catalysts and industrial ceramics. The Company will also
own 32% of Tianwu Tongyong (Tianjin) International Trading Co., Ltd, which
mainly sources overseas iron ore for steel mills, and 99% of
Maoming Hengda Iron and Steel Co., Ltd, which holds valuable land
assets worth an estimated RMB 250
million.
"The timely divesture of the steel manufacturing business
is necessary for General Steel in order to preserve liquid assets
that will enable the Company to survive and to focus on the
promising cleantech business," commented Ms. Yunshan Li, Chief Executive Officer of General
Steel, "We are thankful to Chairman Yu with his generous offer to
acquire our steel manufacturing business which will alleviate the
Company from incurring further losses that would potentially
consume all of our remaining working capital. Following the
transaction, we expect our balance sheet will be much stronger due
to a lower debt burden and higher equity. We also expect to
be able to liquidate the land assets in Maoming that could
potentially provide as much as $30-40
million cash gain."
"As we concentrate our efforts on where we can have the greatest
growth and return on investments, we are fully committed to
accelerating our cleantech business. With the air pollution getting
worse throughout China, the
government in December launched a new policy to curb emissions from
coal in its next five-year plan. The new policy will offer
additional subsidies for power plants that can meet ultra-low
emission requirements, including minimum oxygen content and
concentration level of smoke dust, sulfur dioxide, and NOx
emission. We anticipate our De-NOx honeycomb catalysts business
will contribute to our growth and profitability in 2016." Ms. Li
concluded.
About General Steel
General Steel Holdings, Inc. is headquartered in Beijing, China and produces a variety of steel
products including rebar and high-speed wire. Through its majority
equity interest in Catalon, the Company also develops and
manufactures De-NOx honeycomb catalysts and industrial
ceramics.
To be added to the General Steel email list to receive Company
news, or to request a hard copy of the Company's Annual Report on
Form 10-K, please send your request to investor.relations@gshi-steel.com.
Forward-Looking Statements
This press release may contain certain forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are based on management's
current expectations or beliefs about future events and financial,
political and social trends and assumptions it has made based on
information currently available to it. The Company cannot assure
that any expectations, forecasts or assumptions made by management
in preparing these forward-looking statements will prove accurate,
or that any projections will be realized. Actual results could
differ materially from those projected in the forward-looking
statements as a result of inaccurate assumptions or a number of
risks and uncertainties. These risks and uncertainties are set
forth in the Company's filings under the Securities Act of 1933 and
the Securities Exchange Act of 1934 under "Risk Factors" and
elsewhere, including those disclosed in the Company's most recent
Annual Report on Form 10-K, filed with the United States Securities
and Exchange Commission. Forward-looking statements contained
herein speak only as of the date of this release. The Company does
not undertake any obligation to update or revise publicly any
forward-looking statements, whether to reflect new information,
future events or otherwise.
Contact Us
General Steel Holdings, Inc.
Joyce Sung
Tel: +1-347-534-1435
Email: joyce.sung@gshi-steel.com
Asia Bridge Capital Limited
Carene Toh
Tel: +1-888-957-3362
Email: generalsteel@asiabridgegroup.com
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SOURCE General Steel Holdings, Inc.
