Mexican steel giant Altos Hornos de México (AHMSA) is suffering due to the liquidity crisis that prevents it from continuing to produce any steel, according to Mexico’s president today at a conference. Faced with the risk of 10,000 workers losing their jobs, the president conditioned the support to get one of the largest steel companies in the country afloat.
If “the man decided to sell his shares. Transferring their shares in exchange for the debts they have and makes us a proposal that responsible Mexican businessmen want to participate (in the purchase of the company), of course we help to maintain the company and strengthen it," President Andrés said today Manuel López Obrador in his morning conference from the National Palace in Mexico City.
AHMSA, like state oil company Pemex, is technically bankrupt because their liabilities exceed the value of all their assets. As of September 2022, the steel company's total assets (at today's exchange rates) were $2.24 billion and total liabilities $2.90 billion. The technical bankruptcy is $655 million.
According to local press reports, AHMSA, with a capacity of 3.9 million metric tons of steel production per year, requires an injection of $300 million.
Various sources of information could release news about a capital injection in the next two weeks, although it is not specified whether it will be through a loan or a total or partial sale of company shares.
SteelOrbis consulted AHMSA about that information. Although the answer was that by mandate of corporate lawyers, the company must avoid giving information to the press.
The steel company's liquidity crisis intensified after the federal government conditioned prison release in exchange for AHMSA's main shareholder, Alonso Ancira, agreeing to compensate Pemex for the sale of an old fertilizer plant. The agreement was for $216.7 million in three installments, with an interest rate on the unpaid balance.
The first payment was in November 2021 for $50 million, the second on November 30, 2022 for $54.2 million. This caused AHMSA to default on the payment of electricity consumption. According to press reports, citing union leaders from the steel company and business organizations in the region, since that date the company has not produced a single gram of steel.
They also report that next week the state Federal Electricity Commission (CFE) will suspend the supply of electricity to the company due to non-payment.
According to the president of Mexico, AHMSA, in addition to the CFE, also has accounts payable to Pemex and the treasury. In addition, the third and final payment for $112.5 million, plus interest, of the reparation agreement to the state oil company is pending.
“We are willing to help (...), but the businessman. Mr. Ancira has to make a decision on this (the sale of AHMSA)", emphasized López Obrador and pointed out "so that he does not leave people without work."
AHMSA's zero production has already impacted the steel market on the southern border of the United States, since in the face of price increases, they resorted to buying steel with Ternium, but now that company supplies AHMSA's customers.