Amsa, which in August posted the first interim profit in six years, said the proceeds from the sale would assist in strengthening its balance sheet significantly.
The group said the sale marked a milestone for achieving its objectives.
“The funds will primarily be used to strengthen the balance sheet and fund the working capital requirements and will support the company in achieving its goal to be a sustainable and profitable company,” Amsa said.
Macsteel is 50percent owned by Machold and 50 percent held by MSSA Investments, a wholly owned Amsa subsidiary. The stock traded 9.95 percent higher to change hands at R4.31 a share at 12.07pm.
An analyst who spoke on condition of anonymity said the share had been on the rise since the sale was first mooted in May.
“Today’s announcement is a catalyst for the jump. There is more to the strong share price than the announcement,” he said, adding that there had been a reprieve from the US.
The transaction comes as South Africa last month said that the some local steel and aluminium producers had been granted exemptions from tariffs on exports to the US. US President Donald Trump earlier this year moved to introduce a 25 percent tariff for steel imports and 10 percent tariff for aluminium imports.
Despite Amsa losing 35.4 percent in the year to date, the stock had risen 8percent on news of the exemptions. It also rose 24 percent on May 28, when the company first announced the plans to dispose of its 50 percent stake in Macsteel International Holdings.
The group said it was selling Macsteel as it was no longer considered a core asset. It said while most of the steel for the joint venture was sourced from Amsa in the early days, the South African steel maker currently supplied less than 20 percent of the total tonnage traded and less than 2 percent of volumes shipped by joint venture.
Amsa, which is valued at R5bn, also told shareholders yesterday that the remaining conditions precedent had now been fulfilled.
These included Amsa and Macsteel International Holdings entering into a new, four-year marketing agreement. The companies also had to obtain government and regulatory approvals.
Amsa previously hinted that it was planning to sell non-core assets after battling pressure on its balance sheet after haemorrhaging billions of rand amid cheap Chinese steel imports and a lack of big domestic infrastructure spend. The government also moved to introduce tariffs on certain steel imports in a bid to protect the local industry.
In August the company said that strong global demand, a 17percent jump in international steel prices and lower costs helped the group to report interim headline earnings of R54m, compared to the headline loss of R1.6bn in the first half of 2017.
Amsa shares closed 10.20 percent higher on the JSE yesterday at R4.32.
BUSINESS REPORT ONLINE