Hills Industries takes hard line on metal
Hills on Tuesday sold its controlling 48 per cent stake in scaffolding and piping group Korvest, which raised $26 million. Also on the block is its Orrcon tube and pipe unit and its steel fabrication unit Fielders.
"There is a good level of interest," Mr Pretty said of the two assets which generate about $600 million annually.
Unlike other pipe makers, Orrcon is profitable, Mr Pretty said, with Fielders "coming back" in line with the broader construction industry.
The steel sector units are capital intensive and tie up a large amount of capital in inventory as well.
The Korvest shares were sold at $6.50 each, a modest discount to its market price, with the proceeds to reduce debt, which helps to give Hills significant flexibility either for capital management initiatives, such as share buy-backs or dividends, or to fund acquisitions, Mr Pretty said.
Shares in Korvest closed at $7.20 on Tuesday, down 91¢. Hills closed up 5¢ at $1.09.5.
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Hills Industries signalled it wants to quit its steel operations and dispose of as much as 55% of group revenue, shortly after deciding to write off up to $110 million of asset values.
Hills sold its controlling 48% stake in scaffolding and piping group Korvest, raising $26 million. The Korvest shares were sold at $6.50 each, a modest discount to market price.
Hills has put its Orrcon tube and pipe unit and its steel fabrication unit Fielders on the block. Together these assets generate about $600 million annually.
Hills says its steel-sector units are capital intensive and tie up large amounts of capital in inventory. Selling them would reduce debt and free up flexibility for capital-management options or acquisitions.
The $26 million proceeds from the Korvest sale are intended to reduce debt, which Hills says will give it significant flexibility for capital-management initiatives such as share buy-backs or dividends, or to fund acquisitions.
On the day of the sale Korvest shares closed at $7.20, down 91¢, while Hills shares closed up 5¢ at $1.09.5.
According to Hills' boss Ted Pretty, Orrcon is profitable, and Fielders is 'coming back' in line with the broader construction industry.
Ted Pretty said there is a good level of interest in the two assets, which together generate about $600 million in annual revenue.
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