Mexican steel company Altos Hornos de México (AHMSA), currently not operating due to insolvency since the beginning of the year, registered net losses of MXN 7.45 billion ($433 million) in 2022, 1080 percent more than in 2021. However, the company considers that in the second half of 2024, "traditional production levels" will be recovered, according to information from the company reviewed by SteelOrbis.
Without mentioning the name of Argentem Creek Partners, the US investment fund that signed an agreement to buy a controlling share package from AHMSA, the Mexican steel company considers that the process for "the entry of fresh capital that allows the resumption of traditional production levels (...) are in the final phase," the document says.
"The inflow of capital should make it possible to reach said objective (of traditional production levels) starting in the second half of this year 2024," wrote the financiers of the steel company, which until the last day of last year had total debts for the equivalent of $3.28 billion.
The debt is so high that AHMSA considers that any creditor can request the dilution of the company. That's supported because for every dollar it owes, the company has total assets of $72 cents. In other words, debts exceed assets by $920 million.
"These facts indicate the existence of a material uncertainty that casts significant doubt on AHMSA's ability to continue as a going concern."
The financial crisis of recent years at the steel company prevented investing and maintaining the company, "causing in turn a significant reduction in the production of raw materials" this forced it "to buy raw materials and steel from companies "external to high costs."
This purchase of steel and raw materials caused the cost of sales to exceed sales revenue for all of 2022 by 3.8 percent and sales for the fourth quarter of 2022 by 34.4 percent. In both cases, the gross profit of the fiscal years of a previous year turned into gross loss.
AHMSA recognized that the taxes payable in the short term are for the equivalent of $415 million, a figure much higher than the $290 million that the President of Mexico, Andres Manuel Lopez Obrador, commented on the debt to be restructured with the company for partial payments in a time frame.
Labor liabilities (short and long term) are equivalent to $445 million. In 2022, the company decreased its payroll by 7.4 percent, going from 15,000 to 13,905 workers. More than 1,100 people stopped working at the steel company with a production capacity of 5.5 million metric tons of steel.