On the morning of March 1, 2024, Pomina Steel (POM) held an extraordinary congress to announce its business restructuring plan. Specifically, POM plans to establish a new legal entity called Pomina Phu My Joint Stock Company with a charter capital of approximately VND 2,700 – 2,800 billion (accounting for 40% of the capital structure) and bank borrowings of approximately VND 4,000 billion (accounting for 60% of the capital structure).
In this plan, POM will contribute capital in kind by transferring all land, factories, and equipment of Pomina 1 and Pomina 3 plants, in exchange for 35% of the charter capital. Other investors will contribute cash to hold the remaining 65% of shares.
POM’s leadership board stated that the asset valuation result was conducted by AFC auditors and Savills consultants, and the total asset value of the two contributing plants is VND 6,694 billion (excluding VAT). Specifically, Pomina 1 Plant is valued at VND 336 billion and Pomina 3 Plant is valued at nearly VND 6,358 billion.
Estimated revenue approaching VND 6,000 billion after selling 2 plants
Regarding POM, at the Congress, the leadership estimated the value of the two contributing plants from VND 6,000 – 6,800 billion. The company expects to recover approximately VND 5,100 – 5,800 billion from the new legal entity after deducting the contributed capital according to the plan. POM stated that it will use the recovered funds from the new legal entity to repay bank debts (short-term and long-term) of approximately VND 3,757 billion and repay debts to suppliers of approximately VND 1,343 billion.
This is the new restructuring plan after POM suspended the plan to raise VND 700 billion from the sale of over 70 million shares (more than 20% of charter capital) to Nansei (Japan). According to the initial plan, the funds raised from this share sale were to be used to restart the blast furnace and restructure to increase the financial capacity of the company.
In this restructuring plan, POM’s leadership board also stated that Pomina Phu My will have the right to use the brand and distribution system of POM. At the same time, the parties will terminate the business registration of Pomina 1 Plant and Pomina 3 Plant.
Proposal to “contribute” Pomina 2 Plant as well, plant revenue is projected to be VND 14,000 – 15,000 billion
Notably, POM also proposed the merger of Pomina 2 Plant into Pomina Phu My to take advantage of the blast furnace and reduce production costs. According to POM, the company used to transport coke from Phu My to Pomina 1, leading to the coke being cooled down. The new plan will maintain a higher temperature, thus reducing the cost by VND 450,000/ton, thereby increasing competitiveness in the market and increasing future profits. When completed, the company will reduce costs and is expected to operate at full capacity, reaching approximately 1 million tons per year.
Mr. Do Tien Si, Deputy Chairman of POM’s Board of Directors, estimated that the revenue at Pomina Phu My plant could reach VND 14,000 – 15,000 billion (excluding revenue from Pomina 2 plant).
Regarding the market forecast in the coming time, the Chairman of POM stated that steel demand is higher than last year thanks to investment in infrastructure, but the real estate sector is still difficult. Meanwhile, the impact of public investment is not as strong as real estate. Therefore, the steel industry is currently recovering, but slowly.
New investors do not want to disclose their identity yet
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The figures in the proposal are still being negotiated towards the final stage. As for the investors, they still do not want to disclose their identity. Therefore, the specific names have not been announced yet. After the negotiations are completed, we plan to announce the investor’s identity at the annual general meeting scheduled to take place at the end of April 2024,”
according to POM.Regarding the new investor, Mr. Do Duy Thai, Chairman of POM, said it is a group with a large ecosystem and closely related to the steel industry.
“When choosing a strategic investor, we consider many aspects that bring added value to the company. That is the main goal. We must make sure to choose an investor who shares the company’s culture, has integrity, and most importantly, can bring added value to the company,”
added POM’s Chairman.
