Tata Steel Limited has divested its entire stake in NatSteel Holdings Pte. Ltd. Singapore for an equity value of $172 million (Rs 1,275 crore) to TopTip Holding Pte Ltd, a Singapore based steel and iron ore trading company. The company plans to utilise the sale consideration to bring down its offshore debt.
“T S Global Holdings (TSGH), an indirect subsidiary of Tata Steel has entered into a definitive agreement with TopTip Holding Pte Ltd for the s NatSteel Holdings,” the company said in a BSE filing on Thursday.
However, the wires business of NatSteel in Thailand (Siam Industrial wires) has been retained by Tata Steel as part of the downstream wires portfolio. Siam has been carved out of NatSteel and has been consolidated with TS Global Holdings.
“Based on the historical performance of the transacted business, the Enterprise Value to EBITDA works out to be about 13 times,” the company’s BSE filing said.
NatSteel posted revenue of SGD 523 million (Rs 2,852 crore) during FY 21, and has a net worth of about SGD -5.8 million (Rs -32 crore)
Established in 2008, TopTip is a member of Singapore’s GTP programme with an annual turnover of over US$1 billion and has strong relations with Chinese steel mills, the company’s BSE Filing said.
The company’s subsidiaries, NatSteel Holdings Pte. Ltd. (NSH) and Tata Steel (Thailand) Public Comp which were earlier classified as ‘held for sale’ was drawn back in and is classified as ‘continuing operations’ during May 2021.
“We had been classifying it as held for sale because we were in talks with potential buyers. Given the current situation and cyclical upcycle in the market…we felt that we will certainly pursue that option first and if any big decisions need to be taken we will do it later,” said the company’s chief financial officer, Koushik Chatterjee in a press conference.
Later in an interaction with ET, the company’s managing director, T.V.Narendran said that the company is in no hurry to sell its Southeast Asian businesses.
“…Now the steel market has changed. So we felt we are not in any hurry to sell and we can see more opportunities to unlock value going forward as the steel cycle is supportive,” said the company’s managing director, T.V.Narendran in an interaction earlier with ET.
As of Q1 of FY 22, Tata Steel’s consolidated net debt stands at Rs 73,973 crore and the company has set a target to bring down US$2 billion+ of gross debt while prioritizing off-shore debt prepayment.
“The transaction (to sell NatSteel) has been closed today, the consideration received, and will be used for reduction of off-shore debt,” the company’s BSE filing said.
