Hills Industries takes hard line on metal
HARD on the heels of the decision to write off up to $110 million of asset values, Hills Industries boss Ted Pretty has signalled he wants to dispose of as much as 55 per cent of group revenue by quitting its steel operations.
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.