Left like’shag on a rock’, or like a jilted lover: whatever way you describe it BlueScope Steel and its board have some tough decisions to make in the next short while.
Friday’s decision by rivals OneSteel and Smorgon Steel to get ‘hitched’ via their December bans and not the much simpler scheme of arrangement merger of last June, has left BlueScope on the outside, looking in with nothing to show for its 19.9 per cent stake in Smorgon.
That was bought soon after OST and SSX revealed the June marriage plans: the 19.9 per cent stake threatened to derail the scheme so all three started talking with BSL wanting the Smorgon distribution business and other ‘gifts’ in exchange for blessing the union.
OST and SSX wouldn’t agree and things drifted until December when OST and SSX said they would drop the scheme idea and go for a much more complicated combination of joint venture and asset redistribution.
Last week the ACCC blessed the stage one of the December arrangements: the merger of OneSteel and Smorgon’s steel pipe and tube manufacturing businesses.
They said they were waiting for BSL to give any idea of its attitude (preferably approval) of the scheme arrangement by January 31. That came and went without a peep from BSL which is now an onlooker with the December restructuring being put to the competition regulator for approval.
If that’s given BSL will end up a shareholder in a listed Smorgon Steel business based on its distribution operation while around $1.1 billion in other SSX assets would be sold into OST. Blue Scope will own around 5.5 per cent of OST and 20 per cent of the smaller Smorgon Steel.
The vote for this new deal will only need majority shareholder approval compared to the 75 per cent of ‘yeas’ needed for the scheme of arrangement.
The stand alone joint venture to produce around half a million tonnes of structural pipes and tubes a year, has that blessing from the ACCC.
Smorgon Steel shareholders will retain their shares; receive a 6.2 cents-a-share dividend and about one OneSteel share for about every four SSX shares held.
Depending on the timing of the ACCC approval and appropriate tax rulings, the new transaction could be put to shareholders of both companies around late April.
OneSteel shares finished at $4.73 yesterday, Smorgon was up 1c at $1.865 and BSL was off 5c at $8.67.
