Arrium sells NZ steel for $74m

9 Oct 2012, 5:59 pm   -   Source: AAP

Arrium has sold a stake in a New Zealand steel company to boost its defences against a takeover

Arrium has acted to boost its balance sheet against a takeover by selling its majority stake in a New Zealand steel company for $74 million.

The selldown will help put a dent in the $2 billion-plus debt that the steel, mining and mining consumables business is carrying.

The company formerly known as OneSteel announced the sale of its 50.3 per cent stake in Steel & Tube Holdings Ltd, a public listed company in New Zealand.

The stake would be sold for $NZ2.05 ($A1.66) per share in a $NZ91.2 million ($A74.03 million) deal.

It said the cash would be used to reduce debt and gearing, the amount of which has had investors worried and Arrium's share price struggling as iron ore and steel prices have fallen.

Arrium rejected a $1 billion, 75 cents a share cash bid by an Asian consortium Steelmakers Australia last week, that was led by Hong Kong commodities trader Noble Group and South Korean steel giant POSCO.

Since then it has bolstered its defences, highlighting its profitable iron ore division and upgrading its sales and port expansion plans along with Tuesday's New Zealand divestment.

It said total export iron ore sales would reach between eight and nine million tonnes for fiscal 2013 while it would double output to 12 million tonnes.

If iron ore prices stay weak due to subdued demand, analysts believe Steelmakers Australia will be able to pounce on a vulnerable Arrium.

Arrium managing director Geoff Plummer said the sale would build on about $120 million already received to date from business and asset sales under a review of its non-integrated steel businesses, including the earlier sale of its Piping Systems business.

Arrium's share price shed 2.25 cents, or 2.8 per cent, to 78.75 cents, above the suitor's offer price.

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