Steel Mills
Troubled AHMSA Seeks Capital Partner or Buyer
Written by Sandy Williams
September 28, 2019
Mexican steel producer AHMSA is seeking a way out of its financial difficulties including a possible sale of the company, according to various press reports.
Altos Hornos de México is recovering from a corruption scandal that rocked company finances and coincided with a downturn in market conditions.
Board of Directors President Alonso Ancira was accused of corruption involving the sale of a nitrogen plant to Pemex at an inflated price of $273 million. As a result, a temporary freeze was placed on AHMSA finances by the Financial Intelligence Unit. Customers canceled orders and the company was thrown into a financial emergency.
“The negative financial impact due to a measure that was taken without a valid reason was further aggravated by other unfavorable factors, such as the decline in domestic market demand and a strong reduction in global (steel) price,” said Jorge Ancira Elizondo, Co-Director of Administration and Finance of AHMSA.
Since that time, the company has undertaken severe operating cutbacks and financial measures and has worked to restore trust with its clients and credit institutions.
“The worst is behind us,” stated Ancira Elizondo at a meeting with business chamber leaders last week, noting the progress the company has made.
The company’s priority is to shorten payment timeframes with the providers and maintain priority investment, said Ancira Elizondo. The company still hopes to proceed with installation of a $250 million coking plant in Steel Mill 2 with a capacity of 1.2 million annual tons.
“The important point is that AHMSA has never stopped operating and, if we were strong in the past, this crisis has further strengthened us,” he stressed.
AHMSA is looking for a capital partner or possibly a buyer if the offer is attractive enough. Argentina’s Techint Group, which counts Tenaris, Ternium and Tenova among its company portfolio, has been reported as a possible suitor for the company.
On Sept. 26, AHMSA released a statement to the Mexican Stock Exchange saying it does not have a formal agreement to be sold to Techint, but stopped short of denying a sale was possible.
“Regarding information published today about an alleged sale process of the company, Altos Hornos de México (AHMSA) specifies that it is working on several options for capitalization and/or association with various industrial and financial groups without there being any agreement at the moment,” said the statement.
Alonso Ancira was arrested in May, but continues to run the company as chairman of the board while under house arrest in Spain.
About AHMSA
Altos Hornos de México S.A.B. de C.V., the largest integrated steel producer in Mexico (based on tons of liquid steel produced), has two steel plants located in Monclova, Coahuila, and operates its own iron ore and metallurgical coal mines. Its current nominal production capacity is more than 5.5 million tons of liquid steel per year, which is then transformed into a variety of finished products. Additionally, AHMSA operates steam coal mines in Mexico. It employs over 19,000 workers in steel plants, mines and services.
Sandy Williams
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