Tata Steel's Asset Sale Deal with HBIS Hits Roadblock

SEATTLE (Scrap Monster): Tata Steel Limited announced its decision to drop plans to offload struggling steelmaking assets in South East Asian region, following unexpected delay in obtaining regulatory approvals.

According to the notification issued to the Bombay Stock Exchange, Tata Steel was informed by HBIS that they were unable to procure the requisite approvals from the Hebei government, which was one of the pre-conditions for the sale deal to proceed. Consequently, both the parties have agreed not to extend the definitive agreement. The company will begin engagement with other potential investors with immediate effect, to find a partner for the business, the press release said.

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Industry participants noted that it remains unclear as to why HBIS Group failed to receive necessary regulatory approvals. The sale of the assets in the South East Asian region would have helped Tata Steel to trim its debt by approximately $450 million. It must be noted that the company had signed definitive agreements in early-January this year with Chinese HBIS Group Co towards sale of overseas subsidiaries Tata Steel (Thailand) Public Company and NatSteel Holdings Pte for a sum of $327 million.

This is the second major setback to Tata Steel in its attempt to offload loss-making global assets. In May this year, the European Commission had rejected its proposal to merge loss-making European operations with German ThyssenKrupp.