Austrian steelmaker Voestalpine may have to delay a decision on building a new steel plant on the Black Sea due in part to the financial crisis, the company said on Thursday.
Voestalpine is hoping to build a plant with a 5.5 million ton capacity in either Bulgaria, Romania, Turkey or Ukraine, which investment analysts estimate will cost around €5 billion to 6 billion ($6.7-8.2 billion). But it said the financial crisis could now delay the decision on the plant.
“We must look carefully at the financing. If the decision is delayed, it will be dealt with in one or two quarters' time,” spokesman Peter Schiefer said, confirming remarks made by CEO Wolfgang Eder in Washington. “I think you can already see signs of an exit strategy,” RCB analyst Klaus Kueng said. But he said it was positive that Voestalpine does not expect the steel market will collapse, according to comments the company made earlier on Thursday.
Shares in Voestalpine were up 11.5% at 17.30 by 1105 GMT, in line with German peers Salzgitter and ThyssenKrupp. They have lost almost two thirds of their value this year. The company said earlier on Thursday it has no liquidity or financial problems and is sticking to its full-year targets, denying a report it was forced to go to a government province to help finance a deal. A trader said this could have helped the share's upward trend.
Austrian daily Der Standard reported that the steelmaker went cap in hand to the Upper Austrian province and asked for €300 million to help refinance debt raised to fund its €3.72 billion takeover of peer Boehler Uddeholm. “The (newspaper's) interpretation is incorrect,” Schiefer told Reuters. “It is not the case that we have liquidity or financial problems,” he said. “The Upper Austria province had surplus capital and was on the lookout for a way to invest it. During their search, they approached us and asked whether we could take some of it for a set time period and at a set interest rate.”
Schiefer said the €300-million figure was correct but added that the company has several hundred million euros available in unused credit lines. Voestalpine is sticking to its 2008/2009 full-year targets, Schiefer added and said there were some initial signs steel demand was weakening among builders in Britain and Spain. The company does not expect the collapse of the steel market, however. It will give its outlook for 2009/2010 in the next financial year at the earliest. (Reuters)