POM shares surge after extraordinary shareholder meeting

POM shares are maintaining a state of excitement with two consecutive increasing sessions, in which the most recent session hit the ceiling, after the restructuring plan was approved at the extraordinary meeting on March 1.

Shares of Pomina Steel Corporation (stock code: POM) have just had their second consecutive increase, breaking the previous three-session decline. This stock closed the most recent session (March 5) at VND5,640, up to the maximum range compared to the reference and with no sellers at the closing time. Market capitalization calculated at this price reached VND1,570 billion.

Trading volume in the session on March 5 reached 6.45 million shares, 3 times higher than the previous session and the highest level in more than 4 years. Of these, 1.6 million shares were traded at the ceiling price. The total trading value of the whole session reached 35 billion VND.

POM showed a state of excitement that was superior to other stocks in the steel industry. Specifically, while POM reversed from falling to hitting the ceiling price during the session, other stocks such as HPG, NKG, HSG, and TLH did not increase more than 1.5% compared to the reference price.

POM's stock price and liquidity fluctuated after the company held an extraordinary general meeting of shareholders on March 1. This meeting approved the company's restructuring plan.

POM stock price and liquidity chart from December 2023 to present.

According to the content of the proposal, the company's board of directors said the purpose of the restructuring is to synchronize the steel smelting and rolling stages to optimize production capacity at Pomina 1 steel plant and Pomina 3 steel billet smelting plant. In addition, another purpose of the restructuring plan is to improve the company's financial structure.

The restructuring content includes 4 main points.

Firstly, establish a new legal entity, Pomina Phu My Joint Stock Company, with a charter capital of VND2,700-2,800 billion and a bank loan of VND4,000 billion. Pomina will own 35% of the charter capital (equivalent to VND900-1,000 billion) and the investor will own 65% of the charter capital (equivalent to VND1,800-1,900 billion). Pomina will contribute all the land, factories, and equipment lines of the two factories Pomina 1 and Pomina 3, while the new investor will contribute capital in cash. According to the asset valuation results, the value of the physical assets of the two factories expected to be included in the capital contribution of Pomina Phu My is VND6,694 billion (excluding VAT), of which the Pomina 1 Steel Factory is worth VND336.4 billion and the Pomina 3 Steel Factory is worth VND6,357.6 billion.

The second content of the restructuring plan is that Pomina Phu My Joint Stock Company is allowed to use the Pomina brand and distribution system. Next, the Board of Directors is authorized to continue negotiating with investors on the merger of Pomina 2 Joint Stock Company and Pomina Phu My Joint Stock Company to take advantage of the blast furnace and reduce production costs. The final content is to terminate the business registration of the two units, Pomina 1 and Pomina 3.

After contributing capital, Pomina expects to recover about 5,100 - 5,800 billion VND. Pomina said it will use the money recovered from the new legal entity to pay short-term and long-term debts to banks, debts payable to suppliers and the remaining capital to supplement working capital. Of which, the company will pay debts to banks (short-term and long-term) about 3,757 billion VND and pay debts to suppliers about 1,343 billion VND.

Previously, the company's management said that the strong restructuring process, especially with the participation of a strategic investor, is a milestone marking an important turning point for the company. This strategic cooperation will provide the necessary capital for the company to restart the steel billet blast furnace. The company plans to resume operations of the blast furnace in the last quarter of this year to anticipate the return of real estate projects.

Currently, Pomina Steel has not yet announced the identity of the new investor because it is still in the process of negotiating to reach the final steps. However, the board of directors affirmed that the selection of a strategic investor is considered on many aspects such as having the same culture and integrity to bring more value to the company. The board of directors will reveal the identity of the investor at the annual general meeting of shareholders in April.

Source