Swiss Steel carries out capital increase after huge loss
Published: Thursday, Mar 14th 2024, 09:50
Updated At: Thursday, Mar 14th 2024, 09:10
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The steel manufacturer Swiss Steel fell sharply in the past financial year. Turnover fell by a fifth. At the bottom line, the Central Swiss group suffered a steep loss. A capital increase is now intended to save the company.
Turnover fell by almost a fifth to 3.2 billion euros in 2023, as Swiss Steel announced in a press release on Thursday. In the previous year, the sharp rise in steel prices had driven turnover up by more than a quarter.
Demand for Swiss Steel's products dipped: The sales volume fell by 17.3 percent to 1375 kilotons. The average sales price fell by 3.1 percent to 2363 euros per ton. In the previous year, customers still had to pay 2438 euros per ton.
In operational terms, the Group posted an adjusted loss before depreciation and amortization (EBITDA) of 40.9 million. In the previous year, Swiss Steel had still achieved a profit of 217 million euros.
At the bottom line, the company slipped into the red with a loss of 294.8 million euros after a small net profit of 9.4 million euros a year earlier. The year 2023 was disappointing, explained Group CEO Frank Koch.
Capital increase of EUR 300 million
A capital increase of at least 300 million euros (CHF 286.8 million) is now being carried out to bring the Group out of its difficulties. This is secured by major shareholder Martin Haefner and his company Bigpoint, which according to the latest information holds 32.73 percent of Swiss Steel. In a statement, Haefner expressed his conviction in the future viability of Swiss Steel's business model.
In addition, the main financial agreements with the lenders have been extended until September 2028. This also includes the shareholder loans from Bigpoint, according to the statement.
The capital increase is to be approved by the shareholders at an Extraordinary General Meeting on April 4. It must be assumed that a capital increase will only succeed with a further commitment from one or all of the main shareholders (i.e. Bigpoint, Peter Spuhler's PCS Holding and Viktor Vekselberg's shareholder group consisting of Liwet Holding AG and ComplexProm Joint Stock Company), Swiss Steel wrote in the invitation to the Extraordinary General Meeting.
Exception clause for Haefner
The shares held by the main shareholders are likely to increase as a result of the capital increase. As a result, Bigpoint runs the risk of exceeding the threshold of one third of the shares and having to submit a takeover bid for all shareholders in accordance with the law.
Haefner wants to prevent this and has therefore applied to the Swiss Takeover Board (TOB) for an opting-out clause. This has now been approved.
This means that Bigpoint does not have to submit a takeover offer if it exceeds the legal threshold of one third of the shares as part of the capital increase for the purpose of restructuring. Based on the discussions with the three main Swiss Steel shareholders, the Board of Directors assumes that Bigpoint Holding (and possibly another main shareholder) will exceed the threshold of one third of the voting rights in the course of the capital increase, according to the statement.
Bigpoint intends to appoint a member to the Board of Directors following the completion of the capital increase. The company has declared this to the Swiss Steel Board of Directors. Bigpoint is currently not represented on the supervisory board.
Driving restructuring forward
At the same time, Swiss Steel is pressing ahead with its own restructuring. Seven sales companies in Eastern Europe have been sold, as have the sales unit in Chile and the Group's stake in the Chinese joint venture Shanghai Xinzhen Precision Metalwork.
The sale of parts of Ascometal France announced last December has not yet taken place, as the parties involved are still discussing options and have not yet reached a final agreement, Swiss Steel added.
At the same time, Ascometal France Holding continues to examine all strategic options for the future of all its entities. "In the current very difficult circumstances, this may result in a judicial reorganization of all or part of the Ascometal France companies." The sale of Finkl Steel is also being examined, it said.
1000 jobs less ___
In addition, the largest production unit, Deutsche Edelstahlwerke (DEW), was reorganized and split into two legally separate production units. 350 jobs were cut. Over 130 million euros in costs are to be saved by 2025. In total, the steel group has reduced its workforce by over 1000 jobs to 8812 employees. The sale of companies in Eastern Europe also contributed to this.
2024 won't be easy either. "We have received more requests for quotations since the start of the year. However, the markets have not yet normalized overall," Swiss Steel continued. "We expect a gradual improvement in earnings in the first half of 2024, followed by a stronger second half of the year."
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