Middle Eastern steel producer Qatar Steel Company has signed a share placement agreement to acquire a significant (9.07 per cent) shareholding in Perth-based Sphere Investments Ltd.
Middle Eastern steel producer Qatar Steel Company has signed a share placement agreement to acquire a significant (9.07 per cent) shareholding in Perth-based Sphere Investments Ltd.
The agreement involves the issue of a further 9.125 million fully paid ordinary shares to Qatar at an issue price of $1.15 per share, raising a total of approximately $10.5 million.
Earlier this year, Sphere issued a 13 per cent interest in the company to Saudi Iron and Steel Company - a wholly owned affiliate of Saudi Basic Industries Corporation.
In March, the company announced the placement of 34.7 million fully-paid ordinary shares to institutional and other major clients of Euroz Securities Limited at $1.00 per share.
At market close, shares in Sphere were down 3 cents to $1.05.
Below is the full announcement:
RE: Qatar Steel Company builds a strategic stake in Sphere
Dear Sir/Madam,
I am pleased to announce that a second major steel producer and Direct Reduced (DR) pellet consumer from the Middle East (Gulf) region, Qatar Steel Company (QASCO), has signed a Share Placement Agreement to acquire a significant (9.07%) shareholding in the Company.
The agreement involves the issue of a further 9,125,000 fully paid ordinary shares to QASCO at an issue price of A$1.15 per share, raising a total of A$10,493,750.
In addition, in order to meet QASCO's desire to have a strategic stake in Sphere, some of the Directors of Sphere have agreed to sell a total of 2,300,000 shares to QASCO at the same price per share, and exercise a total of 2,300,000 options, as part of the transaction.
The QASCO placement follows another recent placement of 10,300,000 shares at $1.00 per share to the Saudi Arabian Steel Company, Hadeed. Hadeed is a wholly owned subsidiary of the giant Saudi Basic Industries Corporation (SABIC), and is the largest steel producer in the rapidly growing Gulf region.
The combined 17.24% shareholdings in Sphere held by Hadeed and QASCO, the two largest steel producers in the Gulf region, will help underpin the development of the 7Mt/a Guelb el Aouj DR pellet project in Mauritania.
Both Hadeed and QASCO have significant Direct Reduced Iron expansion plans, and are seeking long term DR pellet supply from Mauritania to support these expansions.
Sphere and our joint venture partner SNIM welcome Hadeed's and QASCO's investment in Sphere in the knowledge that they will bring market support and financial strength to the development of the Guelb el Aouj project and are interested in future expansion opportunities.
A joint press announcement from Qasco and Sphere follows.
Yours sincerely,
Sphere Investments Limited
Alexander Burns
Managing Director
QASCO/SPHERE JOINT PRESS RELEASE
QASCO agreement with Sphere (from left); Sheikh Nasser Bin Hamad Al Thani, QASCO's Director and General Manager, Abdallah Ould Abdel Fettah, Director of Studies & Development (SNIM), and Alexander Burns, Managing Director (Sphere)
Qatar Steel Company (QASCO), a Qatari joint stock company, have signed a Share Placement Agreement with ASX listed Sphere Investments Limited (ASX: SPH) to acquire a strategic shareholding in Sphere. The agreement involves the issue of 9,125,000 fully paid ordinary shares to QASCO at an issue price of A$1.15 per share, raising A$10,493,750.
Further, QASCO has purchased additional 2,300,000 shares at the same price per share amounting to A$2,645,000 from some of the Directors of Sphere in order to meet QASCO's desire in having a strategic stake in Sphere.
Accordingly, QASCO now becomes the owner of 9.07% of Sphere shares.
QASCO is wholly owned by Industries of QATAR (IQ) which is 70% owned by Qatar Petroleum (QP). In turn, QP is wholly owned by the government of the State of Qatar. QASCO is the first fully integrated steel plant built in the Gulf region. QASCO's plant is located at Mesaieed Industrial City, 45 kilometres south of Doha, the capital. Today, QASCO is one of the largest integrated steel producers in the Gulf.
Commenting on the transaction, Sheikh Nasser Bin Hamad Al Thani, QASCO's Director and General Manager, said that this investment is strategic for QASCO and sets the stage for penetrating the Mauritanian Iron Ore industry in a joint venture with capable, experienced and reliable partners.
Sphere is currently earning a 50% interest in a joint venture with its Mauritanian iron ore partner Sociiti Nationale Industrielle et Minihre (SNIM), by completing the bankable feasibility study (BFS) on the Guelb el Auoj DR pellet project that is due for completion in the first quarter of 2007. SNIM is the world's seventh largest supplier to the seaborne traded market in iron ore and currently exports approximately twelve million tonnes per annum of iron ore primarily to the major European steel producers.
QASCO and Hadeed, two of Sphere's strategic shareholders, are major consumers of DR pellets. Both companies have major expansion plans to meet burgeoning demand for steel in the Gulf region.
Commenting on the deal, Sphere's Managing Director Mr Alexander Burns said, "QASCO's show of support for our iron ore joint venture with SNIM is further evidence of the strong backing the project is receiving from strategic partners in the Gulf region which is the fastest growth market for steel outside of China."
