ArcelorMittal sells Gestamp stake for $991 mn, plans $3 bn share sale to pare debt
05 Feb 2016
ArcelorMittal, the world's largest steelmaker, today said it has sold its 35-per cent stake in Gestamp Automoción (Gestamp) for a total cash consideration of €875 million. The company also announced plans to raise another $3 billion through fresh share issue to reduce pro forma net debt (as of 31 December 2015) by $4 billion to below $12 billion.
ArcelorMittal said it sold the stake in Gestamp to the majority shareholder, the Riberas family, for a total cash consideration of €875 million. The transaction is unconditional and payment is expected to be made to ArcelorMittal within six months. In addition to the cash consideration, ArcelorMittal will receive a payment of €10 million as a 2015 dividend, the company stated in a release.
The company also announced a five-year strategic roadmap, the ArcelorMittal Action 2020 plan, which sets out improvement plans for each of its five business segments and aims to improve pre-tax profit (EBITDA) and free cash flow performance.
Under the $3.0 billion share issue, expected to be completed in the first half of 2016, ArcelorMittal will raise capital by way of a rights issue for ArcelorMittal shareholders - the Mittal family has committed to take up its pro-rata entitlement corresponding to approximately $1.1 billion.
ArcelorMittal 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 lenders undertook to underwrite the capital increase for the remaining amount, subject to customary conditions.
The steelmaker said while the sale of stake in Gestamo is expected to close by the end of June 2016, it will continue its supply relationship with Gestamp through its 35 per cent shareholding in Gonvarri, a sister company of Gestamp.
Assuming completion of the rights issue and factoring in the Gestamp sale proceeds, the Company's net debt at 31 December 2015 would be less than $12bn representing 2.2 times its 2015 pre-tax profit.
Lakshmi Mittal, chairman and CEO of ArcelorMittal, said, ''This capital raise, combined with the sale of our minority shareholding in Gestamp, will accelerate the company's debt reduction plans and enable us to reduce net debt to less than $12 billion. This will help ensure that the business is resilient in any market environment and puts ArcelorMittal in a position of strength from which to further improve performance.
''The company had already announced plans to reduce the cash requirements of the business and improve EBITDA in 2016. A more detailed long-term strategic review has now been completed, setting out the performance improvement potential for the five year period to 2020.
''Looking ahead it is clear that those steel companies with a combination of the right assets, the right strategy and the right balance sheet will prosper. We are confident ArcelorMittal has this combination and that we are in a strong position to deliver on the targets identified and cement our position as the world's leading steel company.''
The board of directors has proposed that an extraordinary general meeting will be held to pass the resolutions necessary for the capital increase.
ArcelorMittal has filed a registration statement (including a prospectus) with the United States Securities and Exchange Commission (SEC) for the share offer.
