CSI sale to cut Tiso Blackstar debt load
Macsteel has agreed to pay the net asset value of CSI as determined once competition authority and other regulatory conditions have been met
Tiso Blackstar Group, the owner of Business Day, said on Monday it would use proceeds from the sale of its steel business, CSI, to reduce debt.
In its core business, Tiso Blackstar had debts worth about R900m at last count.
Tiso Blackstar has been looking for buyers for noncore assets — its interests in investment holding company Kagiso Tiso Holdings (KTH) and steel firms Robor and CSI — as part of plans to reduce debt and invest in its core media business.
The group said it would sell all of CSI to Macsteel Service Centres SA for a cash amount equal to the consolidated net asset value of the steel unit and its subsidiaries.
At the end of 2017, CSI’s net asset value was R68.9m.
CSI owns Global Roofing Solutions, a South African roofing materials manufacturer, and Stalcor, a producer, stockist and distributor of stainless steel and aluminium products.
In the six months to the end of December 2017, CSI generated a loss attributable to Tiso Blackstar of R7.7m.
Tiso Blackstar said the steel industry “is in significant decline” because of the weak economy and excess capacity. The weaker construction and mining sectors had also dented demand. “The tariff protection given to local steel makers has exacerbated the problem as local steel prices have risen by the same percentage as the tariff charged on imported steel and at the same time discount and payment terms have been reduced. This has placed the South African downstream steel industry under enormous pressure,” Tiso Blackstar said.
Effective June 15, Tiso Blackstar sold 3.6% of KTH for R197.9m, the proceeds of which it used mainly to pay off debt.
Tiso Blackstar’s effective interest in KTH was reduced to 20%, though the group said in June it wanted to “successfully realise this investment and negotiations are continuing in this regard”.