General Steel Subsidiary Hengda Steel Signs Materials Sourcing and Production Agreement with State-Owned Enterprises
BEIJING, July 18, 2012 /PRNewswire-Asia-FirstCall/ -- General Steel Holdings, Inc. ("General Steel" or the "Company") (NYSE: GSI), one of China's leading non-state-owned producers of steel products and aggregators of domestic steel companies, today announced that its 99%-owned subsidiary, Maoming Hengda Steel Co., Ltd. ("Maoming Hengda"), recently signed an agreement with Tianjin Products & Energy Resources Development Co., Ltd. ("Tianwu"), and Tianjin Linktone Co., Ltd. ("Linktone"), under which Maoming Hengda will purchase steel billet from Linktone and sell rebar manufactured from this steel billet to Tianwu at a fixed markup of RMB 200 per metric ton (approximately USD $31.85).
General Steel estimates that the rebar will be produced with conversion efficiency of approximately 95%, and any scrap steel generated in the manufacturing process is expected to become the property of Maoming Hengda for recycling or other applications.
"This agreement with Tianwu and Linktone represents another important step in our efforts to enhance our raw materials' sourcing efficiency and improve our gross margin performance, while further expanding our relationships with prominent state-owned enterprises," said General Steel Chairman and Chief Executive Officer, Mr. Henry Yu. "It enables us to establish a fixed markup for the rebar sold to Tianwu, which secures a stable gross margin under the agreement. We are discussing additional collaboration opportunities on both raw materials procurement and steel processing with Tianwu and Linktone and are excited about the long-term potential of this relationship."
About General Steel Holdings, Inc.
General Steel Holdings, Inc., (NYSE: GSI), headquartered in Beijing, China, operates a diverse portfolio of Chinese steel companies. With 7 million metric tons of crude steel production capacity under management, its companies serve various industries and produce a variety of steel products including rebar, high-speed wire and spiral-weld pipe. General Steel Holdings, Inc. has steel operations in Shaanxi and Guangdong provinces, Inner Mongolia Autonomous Region and Tianjin municipality. For more information, please visit www.gshi-steel.com.
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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, and include: (a) those risks and uncertainties related to general economic conditions in China, including regulatory factors that may affect such economic conditions; (b) whether the Company is able to manage its planned growth efficiently and operate profitable operations, including whether its management will be able to identify, hire, train, retain, motivate and manage required personnel or that management will be able to successfully manage and exploit existing and potential market opportunities; (c) whether the Company is able to generate sufficient revenues or obtain financing to sustain and grow its operations; (d) whether the Company is able to successfully fulfill our primary requirements for cash; and (e) other risks, including those disclosed in the Company's Form 10-K, filed with the SEC. 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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SOURCE General Steel Holdings, Inc.