Jindal Saw hives off its interests in USA affiliates

The Board of Directors of Jindal Saw Ltd (JSL), in a special meeting held on August 21, 2007, has accorded their approval to divest its entire interest in US operations. JSL has minority interest in US companies, which are unlisted.

JSL has agreed to divest its minority stakes in all the US Companies at a total enterprise value of app. USD 900 million for these companies. A part of enterprise value will go to satisfy debt and outside liabilities in these companies. Under the terms of the transaction, which are in the process of finalization, JSW Steel Ltd, through its off shore subsidiary, will acquire the stocks held by JSL against payment of cash. The transaction will be subject to receipt of necessary approvals from various authorities.

The contemplated transaction will yield post tax cash inflow of exceeding USD 200 million against a nominal initial equity investment. The funds inflow will add significant value to JSL business. JSL will gradually invest the funds for creation of additional world class facilities, investment in new business opportunities and for modernization of existing facilities, wherever required. Pending deployment of the fluids, JSL will de-leverage its balance sheet resulting in reduction in finance costs and improvement in credit profile. Further, the divestment will also reduce the investments in working capital.

Future Outlook:

JSL believes that increase in refining capacity and investments in oil and gas infrastructure will drive the demand for line pipes from domestic and nearby global markets especially Middle East, Africa and South East Asian countries. These markets cater to app. 45% of the total world' demand of line pipes. JSL is well positioned to reap the benefits with more focus on the Pipe production. We expect demand of all pipes to rise year on year and JSL by additional investments in new world class facilities would be a dominant player in the Indian Pipe Sector.

Source : Equity Bulls

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