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Published on March 4, 2008

Mill Con Steel will issue no fewer than 25.86 million new shares to swap with Burapa Steel Industries at a ratio of 1:1 plus Bt200 million in cash, said Mill Con Steel director Pirom Sawpayon.

The 25.86 million shares will be part of the company's plan to float 173 million capital-increase shares with a par value of Bt1 apiece. The remaining shares will be reserved for stock dividends and offered through private placement to raise funds to finance the company's cash payment plan for Burapa Steel Industries' shares, repay Burapa Steel Industries' bill of exchange and for the company's working capital.

Mill Con Steel managing director Sittichai Leeswadtrakul said the acquisition would raise the company's sales revenue to Bt5 billion, from Bt4 billion targeted before.

It will also raise the company's capacity from 500,000 tonnes per annum now to 800,000-900,000 tonnes, he said.

"The company will be able to produce high-quality steel, and we'll become one of the top five steelmakers in the country after the acquisition," Sittichai said. The acquisition is subject to approval by the company's shareholders, who will convene a meeting on April 11.

Thai Capital chairman Chamni Janchai said the company decided to sell out to Burapa Steel Industries because his company's cash flow was not sufficient to produce steel at a break-even point.

One research study shows Burapa Steel Industries needs a cash flow of about Bt700 million to run at a capacity that can break even, he said, adding that it would generate a return of 15-20 per cent if an equal amount were invested in the coal-mining business.

The company then raised the idea of using proceeds from the share sale plus another Bt170 million from a land sale to engage in coal mining, he said.

Siriporn Chanjindamanee

The Nation