TKC embarks on equity restructuring program

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TKC Metals Corp. plans to proceed with an equity restructuring program, as it aims to strengthen shareholder value after the drop in steel prices since 2014 weighed on the company’s financials.

In a disclosure to the stock exchange, TKC said it targets to increase its authorized capital stock by P2 billion. This will accommodate the advances the company took from its shareholders for working capital purposes amounting to P2.6 billion.

The PSE’s listing and disclosure rules mandate that companies logging negative equity for three consecutive years must be delisted.

The listed steel manufacturer attributed the negative equity to the drop in steel prices since 2014, which effectively weighed on the company’s financials.

“The company was therefore constrained to reduce its operations for the past years. Steel prices have only recently started recovering. Furthermore, the lack of sufficient electric power in the Mindanao area severely hampered the continuous production of our main product line,” the company said.

With this, the company plans to undertake an equity restructuring program to bring back shareholders’ value while waiting for the steel market to recover.

Once the company completes the conversion of the shareholders’ advances to equity, TKC will be able to reverse its negative equity to P1.71 billion. — Arra B. Francia