BEIJING, Nov. 13, 2015 /PRNewswire/ -- General Steel Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI) announced today that it has regained compliance with the continued listing standard of the New York Stock Exchange (the "NYSE") relating to a minimum average share price of at least $1.00 over a 30 trading-day period. The Company's Board of Directors (the "Board") has also authorized the Company's management to investigate and pursue the potential sale of all its ownership in Maoming Hengda Steel Company, Ltd. ("Maoming Hengda") and Shaanxi Longmen Iron and Steel Co., Ltd. ("Longmen Joint Venture") in order to unlock the hidden value in Maoming Hengda's land assets, divest and restructure steel business.
In a letter dated November 9, 2015, the NYSE notified the Company that the average closing price of its common stock for the 30 trading-days ended November 9, 2015 was above the NYSE's minimum pricing standard of $1.00, and accordingly, General Steel has successfully regained compliance with the NYSE minimum pricing standard.
With the Company's recent acquisition of controlling interest in Catalon Chemical Corp, ("Catalon") providing large business opportunities, highly-positive profit margins, and excellent growth potential in the cleantech sector, the Company has proposed and received approval from its Board for the Company's management to take the next step in its previously announced plan to reduce the complexity of its business structure, consistent with the objective for internal simplification and operating efficiency. Due to continuing excess supply, weakening economic growth in China, and sagging prices combining to result in compression in margins and operating losses with respect to its steel production operations, the Company's management has begun to investigate and pursue the potential sale of its land assets, and divesting and restructuring its non-profitable steel production business – while retaining its current steel and iron ore trading activities – and using the proceeds received from any such transaction to more fully develop and grow its cleantech business.
If the divestiture and restructuring of the Company's steel business is fully completed as currently contemplated, General Steel's remaining businesses will be primarily comprised of General Steel (China) Co., Ltd, a trading company that mainly sources overseas iron ore for steel mills, and Catalon, which develops and manufactures De-NOx honeycomb catalysts and industrial ceramics.
Maoming Hengda and Longmen Joint Venture's current daily operations will not be impacted by the Board's authorization. Given the Board's written consent, the Company is engaging in preliminary discussions with potential purchasers for Maoming Hengda and Longmen Joint Venture, and as a result, the Company will report its financial results for the third quarter of 2015 and subsequent quarters with Longmen Joint Venture, which formerly represented over a majority of the Company's consolidated sales, and Maoming Hengda presented as one-line items in both the Company's Condensed Consolidated Balance Sheets and Condensed Consolidated Statements of Operations.
Ms. Yunshan Li, Chief Executive Officer of General Steel commented, "In reviewing our business strategies, our senior management team and the Board undoubtedly believe that our ongoing business transformation should focus the Company's resources into the high-growth, high-profitability cleantech business and the viable trading business, and divest away from the currently burdensome steel production business."
"The Company's strategic objective is to greatly streamline our financials and business focus going forward. Divesting Maoming Hengda and Longmen Joint Venture would significantly enhance our cash position and alleviate us of the Longmen Joint Venture's debt burden on our balance sheet. At the same time, as we demote Longmen Joint Venture's financials to a one-line item below operating results, investors will be able to better gauge our performance and progress. Investors should note, however, that as of today we have not retained any financial or other advisors with regard to the divestiture plan and the ultimate timing will depend on the results of our negotiations, receipt of acquisition proposals and structuring any significant transaction in a manner consistent with our obligations to stockholders."
About General Steel
General Steel Holdings, Inc. is headquartered in Beijing, China and produces a variety of steel products including rebar and high-speed wire. Through its majority equity interest in Catalon, the Company also develops and manufactures De-NOx honeycomb catalysts and industrial ceramics.
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This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations or beliefs about future events and financial, political and social trends and assumptions it has made based on information currently available to it. The Company cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized. Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties. These risks and uncertainties are set forth in the Company's filings under the Securities Act of 1933 and the Securities Exchange Act of 1934 under "Risk Factors" and elsewhere, including those disclosed in the Company's most recent Annual Report on Form 10-K, filed with the United States Securities and Exchange Commission. Forward-looking statements contained herein speak only as of the date of this release. The Company does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.
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