The Australian majority owner of Steel & Tube will sell its stake in the struggling steel distributor.
Arrium, formerly called OneSteel, has appointed an investment bank to sell its 50.3% stake, probably to institutional and retail investors, for about $2.05 a share.
That is a 15% discount to the $2.42 closing price on Tuesday. The company's stock plunged 20 cents (8%) to $2.22 on Wednesday.
Steel & Tube has had a tough time in recent years, battling weak demand, falling steel prices and intense competition.
Arrium tried to takeover Steel & Tube in 2008, offering $4 a share, but abandoned the attempt within a month, citing the global financial crisis.
Now, it expects to garner $91.2 million from the sale, which it will use to reduce its debt mountain.
Steel & Tube chief executive Dave Taylor says the sale will improve the stock's liquidity, and investors are expressing great interest.
Arrium has itself been the target of a takeover bid from a Korean-consortium earlier this month, which the Australian firm rejected.
Steel & Tube says it expects Arrium will continue to be a key supplier.
Some analysts say consolidation is needed in the fragmented steel industry, and Steel & Tube says the company is well positioned to take advantage of what it calls the potential in the industry.
There are a number of board changes, with director Sir John Anderson becoming chairman, replacing Arrium appointment Dean Pritchard, who will remain as a director. Another Arrium appointee, Steve Hamer, has resigned.
