Tata Steel will immediately begin engagement with other investors in continuation of its strategy to find a partner for the South-East Asian business - Arunangsu Roy Chowdhury
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Tata Steel subsidiary TS Global Holdings’ bid to sell-off its struggling overseas subsidiaries Tata Steel (Thailand) Public Company and NatSteel Holdings Pte has hit a roadblock due to delay in getting regulatory approvals.
On Tuesday, TS Global Holdings said it had terminated the definitive agreement signed with HBIS Group Co to divest its equity stake in Tata Steel (Thailand) Public Company and NatSteel Holdings Pte for $327 million.
According to the agreement signed in January, HBIS was to acquire 70 per cent stake in both the companies and the rest to be owned TSGH. The completion of the deal would have helped transfer major portion of its debt in South-East Asia business to the new joint venture company. The transaction was subject to regulatory approvals.
On Tuesday, Tata Steel said, “We have been informed by HBIS that they have not been able to procure the requisite approvals from the Hebei government ( Northern China province), one of the key conditions precedent for the proposed transaction.”
Both parties have, therefore, decided not to extend the definitive agreements, it added.
Following the development, Tata Steel will immediately begin engagement with other investors in continuation of its strategy to find a partner for the South-East Asian business, it added. The sale of assets was aimed at trimming its debt of over ₹1-lakh crore.
This is the second setback for Tata Steel in divesting loss-making global assets. In May, the European Commission rejected the company’s plan to merge its loss-making European operations with German conglomerate Thyssenkrupp. The company now plans to operate the facilities to keep it in going concern rather than idling it. But according to sources close to the company, the EC move could be a blessing in disguise as Tata Steel is hoping to get $2 billion cash flow from the European assets over the next few years...........................BL