Steelnet to offload subsidiary Tube & Pipe

undisclosed amount.
Tube & Pipe, producers of seam-welded steel pipes, mostly for the mining and manufacturing industries, is wholly owned by Steelnet.
Sources familiar with the deal said Steelnet was finalising the deal with Africa Steel, an Indian consortium, which intends to buy the business. But the transaction would require shareholder approval.
“An Extraordinary General Meeting will be held to approve the deal,” said one source, adding that proceeds from the sale of Tube & Pipe would be used to recapitalise other divisions.
Steelnet also operates BMA Fasteners, which makes mild steel industrial fasteners and mining bolts.
It also owns Hastt, which makes tractor and animal-drawn agricultural implements.
Yesterday, Steelnet issued a cautionary note advising shareholders “that the company is currently engaged in discussions that may result in a transaction which might have a material impact on the value of the company shares”. Steelnet closed at US0,15c on yesterday’s trade.
Managing director Mr Anthony Mutemi could not be reached for comment.
Last year, Steelnet’s US$7 million rights offer hit a snag after some shareholders blocked it because they did not follow their rights.
The money was to be channelled towards recapitalising its divisions. At the time, the group said 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 that 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’s stock is ranked among the lowest shares by market capitalisation on the ZSE.
Traditionally, the diversified steel products manufacturer used to have a strong export market in such countries as South Africa, Angola, Botswana, Mozam-bique and Zambia. It unbundled from TZH in 2002.
FBC took over SMM Holdings’ 30 percent shareholding in Steelnet after the mining company failed to service its loan.