Arab Today, arab today arcelormittal plans to raise 35bn
Last Updated : GMT 17:20:07
Arab Today, arab today
Arab Today, arab today

ArcelorMittal plans to raise $3.5bn

Arab Today, arab today

Arab Today, arab today ArcelorMittal plans to raise $3.5bn

Paris - AFP

Top global steel producer ArcelorMittal announced Wednesday plans for a stock and subordinated notes offer to raise $3.5 billion (2.7 billion euros) to reduce its massive debt that has worried investors. \"ArcelorMittal intends to use the net proceeds from the combined offering to reduce existing indebtedness,\" the company said in a statement. The announcement initially sent ArcelorMittal shares down more than five percent in afternoon trading on the Paris stock exchange. They clawed back some ground later however to stand down 2.42 percent at 13.09 euros in afternoon trading while the overall Paris market was up 0.36 percent. \"The market was taken a bit by surprise by the announcement, all the more so given the amount is not negligible,\" said one Paris trader. The offering of common stock and mandatorily convertible subordinated notes would be made in the United States, said ArcelorMittal, and reserved the right to adjust the proportions. \"Deleveraging remains a priority for ArcelorMittal to retain strategic flexibility,\" said the company. It said the offering plus other measures should enable the company to reduce its net debt to approximately $17 billion by the end of June, from about $22 billion at the end of 2012. The three top ratings agency\'s stripped ArcelorMittal of an investor-grade rating at the end of last year citing the company\'s massive debt amid sluggish global steel sales. \"We have consistently said that reducing net debt is a priority for the company,\" chief executive Lakshmi Mittal was quoted as saying. \"This transaction, supplemented by proceeds from ongoing asset disposals, the announced reduction in dividends and continued cost saving initiatives, will significantly lower our net debt and accelerate the achievement of a medium term net debt target of $15 billion.\" Existing shareholders will receive a preferential allocation of new shares, and the Mittal family which controls the company has indicated its intention to participate to a total extent of $600 million. The three-year notes will carry average interest of 5.875 percent to 6.375 percent. They will be mandatorily convertible in ArcelorMittal shares at their expiration or earlier under certain circumstances. A successful placement of the stock and notes should be enough for the company to meet the goal of reducing its debt by $5 billion in the first half of the year given recently announced sales and expected earnings. ArcelorMittal is due to receive $1.1 billion in the first half of this year from the sale of a 15 percent stake in its iron ore mines in Canada to Asian rivals in a deal announced earlier this month. It has also announced the sale of its 50 percent stake in South African mining group Kalagadi Manganese for $447 million. The company has previously said it would cut dividends to $0.20 per share from $1.20. ArcelorMittal also confirmed its guidance of full year 2012 EBITDA operating profit of approximately $7 billion. Moody\'s rating agency welcomed the share offering, estimating that it along with asset sales would help the company bring its debt to operating profit ratio back into line with conditions under its borrowing agreements. \"However, Moody\'s believes the company needs to reduce debt further in order to support the Ba1 rating and will maintain its negative rating outlook until that happens and the global economy and steel market conditions begin to improve,\" it said in a statement. ArcelorMittal said last month that European steel sales had plunged by 27 percent since the global economic crisis began and announced a $4.3-billion write down on the value of its European operations.

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Arab Today, arab today arcelormittal plans to raise 35bn Arab Today, arab today arcelormittal plans to raise 35bn

 



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