Pomina's management board finalized a plan to sell nearly 70.2 million shares to Nansei Steel at a price of VND 10,000 per share, approximately 45% higher than the market price.
Nansei Steel is a metal manufacturer and exporter (primarily steel) based in Chiba Prefecture, Japan. The company established its legal entity in Vietnam six months ago.
Information about the offering, announced this morning by the Board of Directors of Pomina Steel Joint Stock Company (stock code: POM), immediately impacted the stock price on the stock exchange. From the reference price of 6,900 VND, the stock surged to the ceiling price of 7,390 VND with no sellers.
Pomina plans to offer Nansei Steel over 700 billion VND in two tranches to fund its business operations. The first tranche will be in August, offering over 10.6 million shares, with the remainder to be offered a year later. The Japanese partner is restricted from transferring shares for the first three years.
Currently, Pomina has only one major shareholder, Vietnam Steel Trading and Manufacturing Company Limited, with an ownership stake of over 53.3%. If the offering is completed, Nansei Steel will become the second largest shareholder, holding 20% of Pomina's capital.
Pomina is currently facing financial difficulties. Last year, the company incurred a net loss of nearly 1.1 trillion VND and a further loss of 186 billion VND in the first quarter of this year. According to Mr. Do Tien Si, the company's General Director, the sluggish real estate market, which led to a sharp decline in steel consumption demand, and the costs of the newly commissioned blast furnace project are the main reasons for the company's losses.
Pomina initially expected a profit of 300 billion VND for the whole year. However, in the newly updated annual shareholders' meeting documents, the company predicted that the real estate market would not recover, so it maintained a cautious view on the prospects of the steel industry and adjusted its target to a net loss of 150 billion VND. According to the management, the cooperation with Nansei Steel provides the company with sufficient financial resources to meet demand when the market recovers strongly from the middle of next year.
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