SS Steel to issue Tk500cr bond for expansion

SS Steel Limited has decided to issue a convertible bond worth Tk500 crore for term loan repayments and factory modernisation.

The publicly listed steel manufacturer expects to add Tk2,000 crore in revenue per year from the planned expansion, Company Secretary Md Mostafizur Rahman told The Business Standard. 

He said the company intends to repay long-term bank loans due to high interest rates. Specifically, it plans to repay Tk300 crore in term loans and allocate Tk200 crore towards modernising existing projects.

If the company can make the modernisation successfully then its production capacity will be increased by 600 tonnes per day, which will add Tk2,000 crore to its annual revenue, he added.

The features of the bond will be unsecured, convertible, or redeemable with coupon payments. The bond will be issued through private placement with a tenure of seven years.

Earlier in November last year, the securities regulator expressed concerns regarding the escalating liabilities of SS Steel.

At the end of the fiscal 2022-23, the company's bank borrowings and other liabilities stood at Tk974 crore, which was Tk60.83 crore five years ago.

The company said it took the term loan to acquire two companies after its stock market listing.  

In FY23, the company achieved a revenue of Tk1,486 crore, compared to Tk764 crore in FY22.

Its net profit after tax stood at Tk1.77 crore, which was Tk61.34 crore a year ago.

The company recommended a 2% cash dividend for its shareholders last fiscal year.

It raised Tk25 crore from the capital market to expand its business in 2019.

The company manufactures a 500W MS-deformed rod, MS-ingot, billet, and steel for the reinforcement of concrete.

SS Steel shares closed at Tk13.30 each at the Dhaka Stock Exchange on Monday.