BANGKOK -- Leading Thai steelmaker Sahaviriya Steel Industries has gone into bankruptcy, hit by falling steel prices.
Its application for business rehabilitation has been accepted by the Central Bankruptcy Court of Thailand, the company said in a statement.
Sahaviriya Steel slid into insolvency after a British subsidiary, Sahaviriya Steel Industries UK, stopped making slab, an intermediate material for steel sheet, due to the market slump.
The Thai steelmaker acquired a mothballed plant in Redcar, England, from India's Tata Steel for $470 million in 2011, resuming production there in 2012 and foraying into slab production. But with cheap Chinese steel flooding the market, prices plunged. Production costs began to exceed selling prices, according to Sahaviriya Steel President Win Viriyaprapaikit.
Sahaviriya Steel has been posting net losses since 2011. Its liabilities surpassed assets by 990 million baht ($27.5 million) at the end of June.
On Sept. 19, the company halted operations at the British unit, laying off 1,700 of about 2,000 employees.
Sahaviriya Steel owes lenders Krung Thai Bank, Siam Commercial Bank and Tisco Bank an estimated 50 billion baht. The company plans to restructure its debt with the three creditors while reviving its business through a focus on its mainstay hot- and cold-rolled steel.
Meanwhile, a Toyota Motor unit in Thailand that previously procured steel sheet produced with slab made by the U.K. company has said that it plans to find alternative suppliers.
Japan's JFE Steel and Marubeni-Itochu Steel each held a stake of about 3.5% in Sahaviriya Steel as of March 31, according to data from the Stock Exchange of Thailand.