FBC Bank sheds Steelnet stake

Chingwena.
FBC had gained a controlling stake in Steelnet after SMM Holdings failed to settle a US$8 million debt arranged by the local financial institution from Africa Export and Import Bank.
SMM was the controlling shareholder in Steelnet and had pledged shares of the diversified steel products manufacturer as security.
SMM also lost 59 percent shareholding in listed firms, Turnall and 19 percent in General Beltings as their shares had also been pledged as security.
Mr Chingwena could neither confirm nor deny the transaction. The deal involved a parcel of 155 million Steelnet shares. This has come at a time when Steelnet is at an advanced stage of selling its Tube & Pipe Industries subsidiary.
Tube & Pipe, which produces seam-welded steel pipes largely for the mining and manufacturing industry is wholly owned by Steelnet.
Africa Steel, an Indian consortium, has already agreed to pay for the business although the deal has yet to be approved by the shareholders.
Steelnet also operates BMA Fasteners, which makes mild steel industrial fasteners and mining bolts. It also owns Hastt, which makes tractors and animal-drawn agricultural implements.
Last year, Steelnet’s US$7 million rights offer hit a snag after some shareholders blocked it because they did not have money to follow their rights.
The money was to be channeled towards recapitalising its divisions.
The group said then that it was not realising its potential due to working capital constraints.
In the full year to December 31, Steelnet recorded a US$5,2 million loss due to low capacity across its operations. The group indicated the successive losses recorded over the past two years were now a threat to its ability to continue operations.Capacity of the group’s operations was mainly affected by inadequate raw materials, significant impairment on property, high borrowing costs and doubtful debt provisions.
Steelnet is ranked among the lowest shares by market capitalisation on the local bourse.
Traditionally, the diversified steel products manufacturer used to have a strong export market in South Africa, Angola, Botswana, Mozambique and Zambia. It unbundled out of TZH in 2002.