ArcelorMittal Announces $3.0 Bln Capital Raise

(RTTNews) - Steel giant ArcelorMittal (MT) announced a proposed capital raise of US$3.0 billion which, alongside the sale of its minority stake in Gestamp for about US$1 billion also announced today, would reduce pro forma net debt as of 31 December 2015 by US$4 billion to below US$12 billion.

The company said it will raise the capital through a rights issue for its shareholders. It is expected to be completed in the first-half of 2016. The Mittal family has committed to take up its pro-rata entitlement corresponding to approximately US$1.1 billion.

ArcelorMittal said it has entered into a standby underwriting commitment with Goldman Sachs International, BofA Merrill Lynch and Crédit Agricole Corporate and Investment Bank, acting as Joint Global Coordinators, pursuant to which the Joint Global Coordinators undertook to underwrite the capital increase for the remaining amount, subject to customary conditions.

In a separate press lease, ArcelorMittal Europe reported that an operating loss for the fourth quarter ended 31 December 2015 was 465 million euros, compared with a profit of 122 million euros for the same quarter in 2014. The latest-quarter results was impacted by impairments of 366 million euros, primarily in connection with the temporary idling of ArcelorMittal Sestao in Spain, as well as 316 million euros of inventory write-downs following the rapid decline of steel prices.

EBITDA in the recent quarter improved by 12.5% year-on-year, mainly due to lower costs and efficiency improvements partly offset by lower average steel selling prices (-10.2%) and lower steel shipments (-1.4%).

In terms of production, crude steel production fell by 8.2% to 10 million tonnes in the final quarter of 2015, compared with the previous quarter, primarily due to lower demand and maintenance works including the reline of a blast furnace in Dunkirk, France, and repairs to a blast furnace in Gent, Belgium.

In terms of the economic outlook, ArcelorMittal expects the modest European economic recovery to continue in 2016, with EU28 GDP growth up to 1.9% year-on-year from 1.8% in 2015.