NatSteel refuses Sanion’s bridging offer
Last weeks reports were telling about Oei Hong Leong's bridging loan offer to NatSteel, challenging the board's reasons for not accepting to pay a S$1.55 per share from divestment proceeds of S$587million from the sale of NatSteel Broadway and NatSteel Brasil, which would have entitled him to a payout of S$171.12 million.
Upon such bridging offer from Sanion suggesting that his S$171 million can be used by NatSteel for repayment of bank loans, NatSteel's response came in as refusal bringing forth the fact that if it did not set aside the sums of S$246 million for capital expenditure and $100 million to repay loans, it would have to depend entirely on the cash generated from its businesses. According to the company “Cash generated from the businesses can be uncertain in quantum and timing” and such situation would lead the company to become dependent on the lenders discretion of operations and fund
investments for maintenance and growth.
According to the board
opinion, it is not viable that NatSteel distributes S$ 1.55 per share and still remain in a position to function as a properly capitalised group capable of maintaining its performance and growth prospects.
NatSteel believes problems and conflicts may arise in the priority of applying any cash available in the group between repaying NatSteel's debt to Sanion as a result of the bridging loan, funding group's operational and investment requirements, repaying loans and paying future distributions to shareholders in case of an acceptance of Sanion's bridging offer.
Meanwhile, 32.15% shareholding 98 Holdings' general offer of S$2.06 per share closes on January 3, 2003.