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Friday, March 29, 2024

TKC Metals selling steel manufacturing unit in China for P1.74b

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TKC Metals Corp. said Wednesday it will sell its losing steel manufacturing business in China to Divine Token Ltd. for P1.74 billion.

TKC said in a disclosure to the stock exchange its board of directors approved the sale of Billions Steel International Ltd., which oversees the group’s China operations through Zhangzhou Stronghold Steel Works Co. Ltd.

ZZ Stronghold is a manufacturer of steel pipes for general construction, water transmission and structural uses. Its plants are located in ZhangZhou, China.

TKC said the sale of China operations would ease its financial burden. It would no longer be required to continue to fund the financial reverses being incurred by the ZZ Stronghold.

The steel manufacturing firm said its China business was incurring operating losses through the past years on adverse business and economic environment, which caused low production and sales volume.

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It said the depressed prices of steel products in the China market, coupled with the changes in the tax policies, also contributed to the company’s financial woes.

“With the persistent low prices of steel products in China, the China operations is expected to continue to incur losses. Thus, the corporation will no longer have any need to subsidize the operations of the subsidiary,” TKC said.

DTL, a corporation organized under the laws of the British Virgin Island, will assume TKC’s advances to the China operations.

TKC said in 2021 it was disposing of all core assets as it plans to explore investment opportunities in the technology businesses and broadband internet.

“The project aims to bring seamless connectivity using wired, wireless and VSAT capabilities for all the cities, municipalities and all the networking communities in the country,” TKC said.

Aside from BSIL, TKC also plans to sell Treasure Steelworks Corp., whose production of steel billets in Iligan City was suspended since 2013.

TKC widened its net loss to P392 million in 2021 from P162 million in 2020.

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