General Steel Files 2011 Annual Report on Form 10-K

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Company Expects to Regain Compliance with NYSE Annual Report Listing
Requirements

BEIJING, Feb. 15, 2013 /PRNewswire/ -- General Steel Holdings, Inc. ("General
Steel" or the "Company") (NYSE: GSI), one of China's leading non-state-owned
producers of steel products and aggregators of domestic steel companies, today
announced that it has filed its Annual Report on Form 10-K for the year ended
December 31, 2011 with the U.S. Securities and Exchange Commission (the "SEC").
The Company's independent registered public accounting firm, Friedman LLP has
expressed an unqualified audit opinion on the Company's annual financial
statement for the 12 months ended December 31, 2011.

With the filing of this Annual Report on Form 10-K, the Company believes it has
met the New York Stock Exchange's ("NYSE") extended deadline and expects to
regain compliance with the NYSE's continued listing requirement for annual
report filings under Section 802.01E of the NYSE Listed Company Manual.

"The filing of our 2011 Annual Report demonstrates our commitment to proper
financial reporting, and is the result of a concerted effort by our finance team
and audit firm partners. Although the review and audit process for our 2011
financial statements took much longer than originally anticipated, we are
pleased that we will regain compliance with the NYSE's Annual Report listing
requirements," said Henry Yu, Chairman and Chief Executive Officer of General
Steel. "Moving ahead, we will continue to focus on our business while we work
diligently to prepare our 2012 financial statements and bring General Steel
fully current in its SEC filing obligations. Again, I would like to thank our
team for their tremendous work and dedication to completing this process, as
well as our shareholders for their ongoing support of the Company."

Full Year 2011 Financial Review

* Total crude steel production capacity under management was 7.0 million metric
tons per annum as of December 31, 2011.
* Total sales increased 89.4% year-over-year to $3.6 billion, from $1.9
billion in 2010. The increase was attributable to both higher sales volume and
increased average selling prices.
* Sales volume for the year totaled 6.2 million metric tons, an increase of 2.3
million metric tons, or 58.1%, compared to 3.9 million metric tons in 2010, with
an average selling price for rebar of $635 per ton in 2011, compared to $526
per ton in 2010.
* Gross loss was $(88.2) million, representing a gross margin of (2.5)%,
compared with gross profit of $31.4 million, or a gross margin of 1.7% in 2010.
The gross loss in 2011 was mainly attributable to a sharp increase in the cost
of iron ore and coke, the Company's primary raw materials, in the fourth
quarter.
* Selling, general and administrative expenses totaled $91.8 million, compared
with $52.6 million in 2010. This increase was mainly related to operational
expansion and an increase in production and shipping volume, which led to an
increase in transportation and sales agent charges.
* Loss from operations totaled $(180.0) million, compared with a loss from
operations of $(21.2) million in 2010.
* Finance expenses for the year ended December 31, 2011 increased to $115.0
million, compared with $51.3 million in the year-ago period. The increase was
primarily due to $27.7 million of non-cash capital financing costs, and a
$36.0 million increase in interest expense from increased bank borrowings.
* Net loss attributable to the Company was $(177.2) million, or $(3.24) per
diluted share, compared with a net loss of $(30.0) million, or $(0.56) per
diluted share in 2010. The year-over-year increase in net loss was primarily
related to the negative gross margin resulting from the fourth quarter raw
material price increases, an increase of $36.4 million in inventory
impairment, an increase of $39.3 million in operating expenses from expanded
operations and higher production and shipping volume, as well as an increase of
$63.7 million in finance expenses from increased capital lease and interest
expense on bank borrowings. In addition, the Company determined that the net
operating loss carryforward may not have been fully realizable in the second
quarter of 2011 and provided 100% allowance charges of $15.4 of deferred tax
assets carried over from 2010.

Fourth Quarter 2011 Financial Review

* Total sales increased 69.9% year-over-year to $793.5 million, compared with
$467.2 million in the fourth quarter of 2010. The increase was attributable to
both higher sales volume and increased average selling prices.
* Sales volume for the fourth quarter of 2011 totaled 1.6 million metric tons,
an increase of 0.7 million metric tons, or 77.8%, compared to 0.9 million metric
tons in the fourth quarter of 2010.
* Gross loss was $(150.7) million, representing a gross margin loss of (19.0)%,
compared with gross profit of $4.7 million, or a gross margin of 1.0% in the
fourth quarter of 2010. The gross loss in the fourth quarter of 2011 was mainly
attributable to a year-over-year increase in the cost of iron ore and coke, the
Company's primary raw materials, that exceeded the increase in the average
selling price of the Company's products.
* Selling, general and administrative expenses totaled $26.0 million, compared
with $17.2 million in the fourth quarter of 2010. This increase was mainly
related to operational expansion and increased production and shipping volume,
which led to an increase in transportation and sales agent charges.
* Loss from operations totaled $(176.6) million, compared with a loss from
operations of $(12.5) million in the fourth quarter of 2010.
* Finance expenses for the quarter ended December 31, 2011 increased to $42.6
million, compared with $13.7 million in the year-ago period. The increase was
primarily related to $18.6 million of non-cash capital financing costs, and a
$10.4 million increase in interest expense from increased bank borrowings.
* Net loss attributable to the Company was $(131.5) million, or $(2.38) per
diluted share, compared with a net loss of $(18.6) million, or $(0.34) per
diluted share in the fourth quarter of 2010. The year-over-year increase in net
loss was primarily related to the negative gross margin resulting from raw
material price increases, as well as an increase of $36.4 million in inventory
impairment, an increase of $8.8 million in operating expenses from expanded
operations and higher production and shipping volume and an increase of $29.0
million in finance expenses from increased capital lease and interest expense
on bank borrowings.

Balance Sheet

As of December 31, 2011, General Steel had cash and restricted cash of
approximately $518.2 million, compared to $263.1 million as of December 31,
2010. The Company had an inventory balance of approximately $297.7 million as
of December 31, 2011, compared to $453.6 million as of December 31, 2010. As
of December 31, 2011, the Company had total liabilities of approximately $3.2
billion, compared to $1.7 billion as of December 31, 2010.

About General Steel Holdings, Inc.

General Steel Holdings, Inc., (NYSE: GSI), headquartered in Beijing, China,
operates a diverse portfolio of Chinese steel companies. With 7 million metric
tons of crude steel production capacity under management, its subsidiaries serve
various industries and produce a variety of steel products including rebar,
high-speed wire and spiral-weld pipe. General Steel Holdings, Inc. has steel
operations in Shaanxi and Guangdong provinces, Inner Mongolia Autonomous
Region and Tianjin municipality. For more information, please visit
www.gshi-steel.com.

To be added to the General Steel email list to receive Company news, or to
request a hard copy of the Company's Annual Report on Form 10-K, please send
your request to generalsteel@tpg-ir.com.

Forward-Looking Statements

This press release may contain certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995. These
statements are based on management's current expectations or beliefs about
future events and financial, political and social trends and assumptions it has
made based on information currently available to it. The Company cannot assure
that any expectations, forecasts or assumptions made by management in preparing
these forward-looking statements will prove accurate, or that any projections
will be realized. Actual results could differ materially from those projected in
the forward-looking statements as a result of inaccurate assumptions or a number
of risks and uncertainties. These risks and uncertainties are set forth in the
Company's filings under the Securities Act of 1933 and the Securities Exchange
Act of 1934 under "Risk Factors" and elsewhere, and include: (a) those risks and
uncertainties related to general economic conditions in China, including
regulatory factors that may affect such economic conditions; (b) whether the
Company is able to manage its planned growth efficiently and operate profitable
operations, including whether its management will be able to identify, hire,
train, retain, motivate and manage required personnel or that management will be
able to successfully manage and exploit existing and potential market
opportunities; (c) whether the Company is able to generate sufficient revenues
or obtain financing to sustain and grow its operations; (d) whether the Company
is able to successfully fulfill its primary requirements for cash; and (e) other
risks, including those disclosed in the Company's Form 10-K, filed with the SEC.
Forward-looking statements contained herein speak only as of the date of this
release. The Company does not undertake any obligation to update or revise
publicly any forward-looking statements, whether to reflect new information,
future events or otherwise.

Contact Us

General Steel Holdings, Inc.
In China: In the US:
Jenny Wang Joyce Sung
Tel: +86-10-5775-7691 Tel: +1-347-534-1435
Email: jenny.wang@gshi-steel.com Email: joyce.sung@gshi-steel.com

The Piacente Group, Inc.
Investor Relations
Brandi Floberg or Lee Roth
Tel: +1-212-481-2050
Email: generalsteel@tpg-ir.com

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS
(In thousands)

ASSETS As of December 31,
2011 2010
CURRENT ASSETS:
Cash $ 120,016 $ 65,271
Restricted cash 398,216 197,797
Notes receivable 92,910 49,147
Restricted notes receivable 584,241 240,298
Accounts receivable, net 12,601 18,500
Accounts receivable - related parties 20,593 4,160
Other receivables, net 22,411 11,150
Other receivables - related parties 87,679 10,938
Inventories 297,729 453,636
Advances on inventory purchase 63,585 24,577
Advances on inventory purchase - related parties 20,244 6,187
Prepaid expense 364 5,018
Prepaid value added tax 24,189 37,323
Short-term investment 2,906 -
Deferred tax assets 167 15,301
TOTAL CURRENT ASSETS 1,747,851 1,139,303

PLANT AND EQUIPMENT, net 1,257,236 602,612

OTHER ASSETS:
Advances on equipment purchase 10,420 14,898
Investment in unconsolidated entities 12,840 17,456
Long-term deferred expense 631 1,439
Intangible assets, net of accumulated amortization 25,143 23,672
TOTAL OTHER ASSETS 49,034 57,465

TOTAL ASSETS $ 3,054,121 $ 1,799,380

LIABILITIES AND EQUITY

CURRENT LIABILITIES:
Short term notes payable $ 1,113,504 $ 480,152
Accounts payable 413,345 241,367
Accounts payable - related parties 121,828 79,694
Short term loans - bank 253,954 285,198
Short term loans - others 246,657 127,712
Short term loans - related parties 15,710 14,548
Other payables and accrued liabilities 49,538 30,087
Other payable - related parties 28,873 18,214
Customer deposit 90,556 133,464
Customer deposit - related parties 68,277 54,922
Deposit due to sales representatives 22,890 51,624
Deposit due to sales representatives - related parties 943 455
Taxes payable 11,374 6,237
Deferred lease income, current 2,099 1,971
Capital lease obligations, current 25,607 -
TOTAL CURRENT LIABILITIES 2,465,155 1,525,645

NON-CURRENT LIABILITIES:
Long-term loans - related party 92,035 91,020
Deferred lease income, noncurrent 76,425 55,620
Capital lease obligations, noncurrent 280,743 -
Profit sharing liability, noncurrent 303,233 -
TOTAL NON-CURRENT LIABILITIES 752,436 146,640

DERIVATIVE LIABILITIES 10 5,573

TOTAL LIABILITIES 3,217,601 1,677,858

COMMITMENT AND CONTINGENCIES

EQUITY:
Preferred stock, $0.001 par value, 50,000,000 shares authorized, 3,092,899 shares 3 3
issued and outstanding as of December 31, 2011 and 2010
Common Stock, $0.001 par value, 200,000,000 shares authorized, 56,601,988 and 56 55
54,678,083 issued, 55,511,010 and 54,522,973 outstanding as of December 31, 2011
and 2010, respectively
Treasury stock, at cost, 1,090,978 and 316,760 shares as of
December 31, 2011 and 2010, respectively (2,795) (871)
Paid-in-capital 107,940 104,970
Statutory reserves 6,388 6,202
Accumulated deficits (229,083) (51,793)
Accumulated other comprehensive income 10,200 10,987
TOTAL GENERAL STEEL HOLDINGS, INC. EQUITY (107,291) 69,553

NONCONTROLLING INTERESTS (56,189) 51,969

TOTAL EQUITY (163,480) 121,522

TOTAL LIABILITIES AND EQUITY $ 3,054,121 $ 1,799,380

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE INCOME (LOSS)

FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010

(In thousands, except per share data)
For the Year Ended

December 31,
2011 2010
SALES $ 2,452,127 $ 1,392,770
SALES - RELATED PARTIES 1,111,769 489,370
TOTAL SALES 3,563,896 1,882,140

COST OF GOODS SOLD 2,519,183 1,369,523
COST OF GOODS SOLD - RELATED PARTIES 1,132,927 481,202
TOTAL COST OF GOODS SOLD 3,652,110 1,850,725
GROSS PROFIT (LOSS) (88,214) 31,415
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 91,827 52,577
INCOME (LOSS) FROM OPERATIONS (180,041) (21,162)
OTHER INCOME (EXPENSE)
Interest income 7,892 6,154
Finance/interest expense (114,949) (51,283)
Change in fair value of derivative liabilities 5,563 15,055
Gain on debt settlement 3,430 -
Gain (loss) on disposal of equipment 693 (9,447)
Realized income from future contracts 415 1,424
Income from equity investments 5,302 6,383
Foreign currency transaction gain 3,424 -
Lease income 2,008 943
Other non-operating income (expense), net (1,442) (3,120)
Other expense, net (87,664) (33,891)
LOSS BEFORE PROVISION FOR INCOME TAXES AND (267,705) (55,053)
NONCONTROLLING INTEREST
PROVISION FOR INCOME TAXES
Current 175 1,267
Deferred 15,419 (10,049)
Provision (benefit) for income taxes 15,594 (8,782)

NET LOSS (283,299) (46,271)
Less: Net loss attributable to noncontrolling interest (106,112) (16,265)
NET LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC. $ (177,187) $ (30,006)
NET LOSS $ (283,299) $ (46,271)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustments (587) 4,623
COMPREHENSIVE LOSS (283,886) (41,648)
Less: Comprehensive loss attributable to noncontrolling interest (105,912) (14,511)
COMPREHENSIVE LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC. $ (177,974) $ (27,137)

WEIGHTED AVERAGE NUMBER OF SHARES
Basic and Diluted 54,750 53,113
LOSS PER SHARE
Basic and Diluted $ (3.24) $ (0.56)

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND OTHER COMPREHENSIVE LOSS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2011 AND 2010
(UNAUDITED)

(In thousands, except per share data)
For the Three Months Ended

December 31,
2011 2010
SALES $ 473,612 $ 351,266
SALES - RELATED PARTIES 319,928 115,895
TOTAL SALES 793,540 467,161
COST OF GOODS SOLD 588,731 347,671
COST OF GOODS SOLD - RELATED PARTIES 355,462 114,774
TOTAL COST OF GOODS SOLD 944,193 462,445
GROSS PROFIT (LOSS) (150,653) 4,716
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 25,984 17,204
LOSS FROM OPERATIONS (176,637) (12,488)
OTHER INCOME (EXPENSE)
Interest income 4,812 2,678
Finance/interest expense (42,632) (13,666)
Change in fair value of derivative liabilities 37 1,476
Gain on debt settlement - -
Gain (loss) on disposal of equipment 14 (6,323)
Realized income from future contracts 415 1,424
Income from equity investments 1,001 2,316
Foreign currency transaction gain 504 -
Lease income 519 345
Other non-operating expense, net (245) (6,655)
Other expense, net (35,575) (18,405)
LOSS BEFORE PROVISION FOR INCOME TAXES
AND NONCONTROLLING INTEREST (212,212) (30,893)
PROVISION FOR INCOME TAXES
Current (442) 407
Deferred 35 (4,105)
Provision (benefit) for income taxes (407) (3,698)
NET LOSS (211,805) (27,195)
Less: Net loss attributable to noncontrolling interest (80,280) (8,589)
NET LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC. $ (131,525) $ (18,606)
NET LOSS $ (211,805) $ (27,195)
OTHER COMPREHENSIVE LOSS
Foreign currency translation adjustments (2,986) 1,177
COMPREHENSIVE LOSS (214,791) (26,018)
Less: Comprehensive loss attributable to noncontrolling interest (80,395) (8,032)
COMPREHENSIVE LOSS ATTRIBUTABLE TO GENERAL STEEL HOLDINGS, INC. $ (134,396) $ (17,986)
WEIGHTED AVERAGE NUMBER OF SHARES
Basic and Diluted 55,352 54,698
LOSS PER SHARE
Basic and Diluted $ (2.38) $ (0.34)

GENERAL STEEL HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(In thousands)
For the Year Ended December 31,
2011 2,010
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (283,299) $ (46,271)
Adjustments to reconcile net loss to cash provided by (used in)
operating activities:
Depreciation, amortization and depletion 58,331 41,153
Impairment of plant and equipment 5,424 1,747
Change in fair value of derivative liabilities (5,563) (15,055)
Gain on debt settlement (3,430) -
(Gain) loss on disposal of equipment (693) 8,257
Bad debt allowance 3,529 326
Inventory written-off 37,512 1,061
Stock issued for services and compensation 1,530 2,479
Income from compensation - (1,377)
Make whole shares interest expense on notes conversion - 1,130
Amortization of deferred note issuance cost and discount on convertible notes - 17
Amortization of deferred financing cost on capital lease 27,704 -
Income from equity investments (5,302) (6,383)
Deferred tax assets 15,419 (10,058)
Deferred lease income 4,782 5,549
Foreign currency transaction gain (3,424) -
Changes in operating assets and liabilities
Notes receivable (41,318) (18,498)
Notes receivable - restricted (329,839) (234,342)
Accounts receivable 4,761 (8,647)
Accounts receivable - related parties (16,015) 14,065
Other receivables (12,638) (3,210)
Other receivables - related parties (50,562) (2,968)
Inventories 131,695 (270,046)
Advances on inventory purchases (37,674) 4,681
Advances on inventory purchases - related parties (13,608) 13,782
Prepaid expense 4,753 -
Long-term deferred expense 845 -
Prepaid value added tax 14,223 -
Accounts payable 160,657 76,003
Accounts payable - related parties 38,647 45,480
Other payables and accrued liabilities 18,076 (1,527)
Other payables - related parties 9,845 30,618
Customer deposits (46,870) (24,433)
Customer deposits - related parties 11,211 18,855
Taxes payable 4,834 (19,543)
Net cash used in operating activities (296,457) (397,155)

CASH FLOWS FROM INVESTING ACTIVITIES:
Restricted cash (190,178) 741
Acquired long term investment - (2,021)
Cash proceeds from disposal of long-term investment - 8,137
Cash made to short term investment (2,858) -
Cash proceeds from sales of equipment 1,306 1,828
Advance on equipment purchases - (7,106)
Equipment purchase and intangible assets (110,939) (89,916)
Net cash used in investing activities (302,669) (88,337)

CASH FLOWS FINANCING ACTIVITIES:
Payments made to dividend distribution - (2,855)
Payments made for treasury stock acquired (1,923) (870)
Capital contributed by noncontrolling interest - 1,184
Borrowings on short term loans - bank 563,007 327,807
Payments on short term loans - bank (600,294) (199,905)
Borrowings on short term loan - others 330,037 152,517
Payments on short term loans - others (212,661) (174,913)
Borrowings on short term loan - related parties 15,450 71,714
Payments on short term loans - related parties (14,817) (11,850)
Borrowings on short term notes payable 1,655,741 905,124
Payments on short term notes payable (1,049,680) (693,633)
Deposits due to sales representatives (30,066) 987
Deposit due to sales representatives - related parties 464 444
Borrowings on long term loan - related parties 14,677 91,020
Payments on long term loan - related parties (16,865) -
Net cash provided by financing activities 653,070 466,771

EFFECTS OF EXCHANGE RATE CHANGE IN CASH 801 1,874

INCREASE (DECREASE) IN CASH 54,745 (16,847)

CASH, beginning of year 65,271 82,118

CASH, end of year $ 120,016 $ 65,271

SOURCE General Steel Holdings, Inc.