Saudi Steelmaker Said in Talks to Renegotiate $2 Billion Debtby and
Steel prices have tumbled globally amid a production glut
Co. expecting it won't be able to meet repayments: people
Saudi Arabia’s Al Tuwairqi Group is restructuring 7.5 billion riyals ($2 billion) of debt at one of its steel units, according to three people familiar with the matter, as a global surplus puts pressure on manufacturers from China to Europe.
Al Tuwairqi started talks with lenders to restructure the debt of Al Ittefaq Steel Products Co. in expectation that it would be unable to make payments, the people said, asking not to be identified as the information is private. It’s the second time since the financial crisis that the company has had to restructure debt, the people said. Al Ittefaq hasn’t defaulted on a payment and the debt is mostly held by banks in Saudi Arabia, two of the people said.
Steel companies around the world have been cutting jobs and production as a glut caused by slowing demand in China leads to a drop in profitability. The European steel industry has reduced 7,000 jobs since last autumn, according to Brussels-based trade association Eurofer. China’s steel exports surged 19.8 percent to 112.4 million metric tons in 2015, crushing global steel prices by 25 percent to 50 percent, according to Bloomberg Intelligence.
Al Tuwairqi didn’t respond to calls and an e-mail requesting comment.