Four Rivers Completes Successful Recapitalization Of Chongqing Steel
SHANGHAI, January 10, 2018
Four Rivers Investment Management Co., Ltd., a joint venture led by WL Ross & Co. LLC and China BaoWu Steel Group has completed a comprehensive restructuring and recapitalization of Chongqing Iron & Steel Co. Ltd. Chongqing Steel operates eight million tonnes of annual capacity to produce long product, hot rolled coil and plates with end market exposure to the construction, infrastructure, shipbuilding and automotive industries.
As part of the restructuring, Chongqing Steel has reduced its debt burden from approximately RMB20 billion to RMB3.5 billion and eliminated additional RMB20 billion in other liabilities. Four Rivers, together with Chongqing Strategic Emerging Industry Equity Investment Fund, injected RMB4 billion of new capital in exchange for 2.1 billion shares (a 23.5% stake) in Chongqing Steel and certain upstream steel making assets. In addition, Four Rivers has strengthened the management team with seasoned industry executives including Mr. Li Yongxiang, former head of Meishan Steel, who will take over as Chief Executive Officer and Mr. Zhou Zhuping, CEO of Four Rivers, who will serve as Chairman. Jie Zheng, a Principal with WLR, is expected to join the board at the next shareholders meeting. Shares of Chongqing Steel resumed trading on the Shanghai Stock Exchange on January 3, 2018.
Stephen Toy, Co-CEO of WLR and director of Four Rivers commented, “This transaction is transformational on both a financial and operational basis for Chongqing Steel. We believe the Company is now well-positioned to meet the demands of the strong and diverse economy in the Chongqing region.”
“The transaction marks one of the largest bankruptcy restructurings in the sector within China and is an important first transaction for our steel focused Four Rivers fund,” commented WLR Managing Director Nadim Z. Qureshi who heads the Asian private equity activity for the firm.
Four Rivers was established to evaluate, invest in and turnaround steel assets in China which represents the world’s largest steel consumer and producer with nearly 50% of all production capacity. It seeks to combine the investing and restructuring expertise of WLR with the industry and operational know-how of BaoWu to create long-term value for its stakeholders.