ArcelorMittal sells partial stake in Turkey’s Erdemir for $267 mn

ArcelorMittal, the world's biggest steelmaker, yesterday said that it has sold a partial stake of 6.66 per cent in Turkey's largest flat steel producer Erdemir Demir ve Çelik Fabrikalari T.A.S to institutional investors for $267 million in cash.

The sale has reduced ArcelorMittal's stake in Erdemir to 12.08 per cent from 18.74 per cent. ArcelorMittal has to wait for 180 days to offload the remaining stake until the expiry of the lock-up period.

This is the second instance that the Luxembourg-based steelmaker has sold its stake in Erdemir. In March 2012, ArcelorMittal had sold around 6.25 per cent in Erdemir for $264 million in cash and had then agreed to a one year lock-up period before selling further stake.

The stake sale is a part ArcelorMittal plan to reduce its massive debt of $16.2 billion. It has already sold assets worth $4.2 billion since September 2011.

ArcelorMittal, whose debt stood at $21.8 billion in January 2013, had reduced it to $16.2 billion by the end of the second quarter. It had earlier said that it aims to further reduce its debt to below $15 billion in the medium term, although it has not specified the time line.

Blaming a slump in demand and overcapacity in Europe, ArcelorMittal, like other European steelmakers, has been shutting blast furnaces and cutting jobs across Europe, including in France, Spain, Poland and Belgium.

In December 2012, the steel maker had to write down the value of its European business by about $4.3 billion.

The European steel industry employs around 360,000 people at about 500 plants, even as steel demand has slumped by 30 per cent since 2007, while global production declined from 22 per cent to 12 per cent between 2001 and 2011.

In India, it pulled out of its proposed $12-billion (Rs72,000 crore) steel mill project in Odisha in July, after inordinate delays in clearances and problems in acquiring land and getting iron ore linkages.