SOUTH AFRICA – One of SA’s biggest steel pipe producers, Robor, is to be liquidated due to weak local demand and cheap Chinese imports.
The 90-year-old, once one of southern Africa’s largest suppliers of steel, tube and pipe, will close its doors after JSE-listed media group Tiso Blackstar said it would write off its R137.6m (US$9.01m) investment in it.
Tiso Blackstar, the publisher of Business Day, the Sunday Times, and Sowetan, holds 47.61% of Robor, which is considered a noncore asset. The Robor investment had an equity accounted carrying value of R137.6m (US$9.01m), according to Tiso Blackstar’s 2018 annual report.
Germiston-based Robor has seen a sharp slump in volumes over the past 18 months, and despite restructuring, cost-cutting and new deals with credit providers, have not been enough to stop the company’s decline.
The decline of the SA economy over the past three years, delays in the signing of independent power producer agreements and the well-publicised financial demise of Eskom has caused systematic harm to production in revenue generation in the steel tube and pipe manufacturing sector, Tiso Blackstar said in a statement.
Eskom’s decision to stop a planned 5 000 km investment in additional power transmission lines, an initiative in which Robor had invested extensively, also hit the company.
“Regretfully, despite all efforts to right-size Robor’s operations, to procure additional tonnages for Robor’s world-class manufacturing facility and to source additional capital, Robor became increasingly unable to maintain the required levels of working capital and liquidity to retain its going concern status.”
It also said that new US import duties on imported steel, hurt Robor’s sales of specialised steel pipe into the US oil and gas industry, previously a lucrative export market.
In December 2017, Tiso Blackstar had disposed of a 3.4% interest in Robor for R16.5m (US$1.08m), reducing its interest from 51.0% to 47.6%, which resulted in a loss of control and step down from a subsidiary to an associate.
Robor’s directors and shareholders unanimously passed resolutions for the winding-up of Robor. The South Gauteng High Court granted the order of liquidation of Robor at the end of last month.
In June, Tiso Blackstar signed an agreement to sell its South African media, broadcasting and content businesses to Lebashe Investment Group for R800m ($US52.37m). The sale would exclude Gallo and its South African radio assets, but includes publications like the Sunday Times, Business Day and Financial Mail.