OREANDA-NEWS. August 06, 2014. POSCO is about to sell off its LNG Terminal, Posfine and POSCO Uruguay as part of its strategy to secure additional cash by selling shares of its highly profitable businesses and improve its financial structure by restructuring non-core businesses.

The three businesses are currently being prepared for sale, with Deutsche Bank selected as the consultant for the LNG Terminal, Samil PricewaterhouseCoopers for Posfine, and Deloitte Anjin LLC and Deloitte Consulting for POSCO Uruguay.

The sale of the LNG Terminal in Gwangyang Works, which is the first step in POSCO improving its financial structure, is a business with guaranteed profitability. Thus, it will be made into a separate corporation, with part of the shares then sold, while POSCO maintains the management rights.

The LNG Terminal is a facility that supplies LNG (Liquefied Natural Gas) imported via an exclusive LNG carrier by storing it in a tank and vaporizing it. Back in July 2004, POSCO was the first to sign a contract to import the LNG produced in the Tangguh gas field in Indonesia, and it completed the Gwangyang LNG Terminal in 2005. This terminal, which is the only private LNG base, has the capacity to store 530,000 of LNG in its four tanks, with various clients in Korea as well as overseas. To secure a stable cash flow, POSCO has expanded its LNG tank lease business for Korean power generation companies and Japan`s general trading firm Itochu. The sale of shares will allow POSCO to acquire investment returns and increase its efficiency in asset management.

Posfine, which pulverizes slag and sells it to cement companies, is to be sold according to POSCO`s business strategy of selection and concentration in the materials business. Posfine was established in 2009 for the stable treatment of slag, which is a by-product of steel, and it recorded an operating profit rate of 12.8% last year. The sale is expected to go smoothly, since Posfine has secured reliable clients and favorable profitability.

POSCO Uruguay, which is a forestation company that conducts business in South America, is also included in the list of companies to be sold. To secure Certified Emission Reduction (CER), POSCO established POSCO Uruguay in February 2009 and purchased 1000 (approximately 3 million pyeong) of land, with POSCO Uruguay planting eucalyptus trees and beginning forestation.

The company was planning to bring the CER it acquired overseas in 2009, but according to the Act on the Allocation and Trading of Greenhouse-Gas Emission Permits enacted by the government in May 2012, the CER cannot be used until 2020, which is why POSCO decided to carry forward with the sale.

The Emission Trading Scheme involves allocating emission permits to companies and allowing them to emit greenhouse gases within the scope and trade with other companies for a surplus or shortage. 38 countries, including 28 EU member states and New Zealand, Switzerland and Kazakhstan, currently implement this scheme, while countries with high greenhouse gas emissions, such as China, U.S. and Japan, have delayed its adoption. It is thus expected to take a considerable amount of time for the system to be implemented on a truly global scale.

By selling shares of the LNG Terminal and withdrawing non-core businesses, POSCO expects to enhance its corporate value and regain its credit rating. The company is expected to push forward with efforts to restructure subsidiaries that lack competitiveness or are not associated with its core businesses, and improve its financial structure by taking outstanding subsidiaries public.