Steel Restructuring

 

POSCO is trying to sell off its affiliate company POSCO Specialty Steel.

According to sources in the steel industry on August 13, POSCO is attempting to sell out POSCO Specialty Steel in order to improve financial structures and reorganize affiliate companies. POSCO Specialty Steel is one of POSCO’s affiliate companies which manufacture and sell stainless bar steel and wire materials.

In fact, POSCO was initially considering initial public offering (IPO) of POSCO Specialty Steel. However, Chairman Kwon Oh-joon met Seo Young-sae, CEO of POSCO Specialty Steel, and talked about the selloff directly on August 11.

A POSCO Specialty Steel employee said, “A selloff has been decided by the group. Other specific details are not determined yet.”

As the market conditions of specialty steel have worsened and POSCO Specialty Steel also has bad profitability these days, it is constantly recording an operating profit surplus. The consolidated sales revenues and operating profits of POSCO Specialty Steel were 1.3167 trillion won (US$1.2861 billion) and 42 billion won (US$41 million) last year, respectively.

This decision of the POSCO Specialty Steel selloff implies that POSCO desires to improve financial structures by securing liquidity through selling the partial equity of high profit businesses and restructuring minor businesses. POSCO has consistently sold out minor businesses this year, and is expected to secure more than 1 trillion won in cash by selling off POSCO Specialty Steel.

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