2nd UPDATE: ArcelorMittal Stainless Steel Spin-Off Proceeding
08 Dicembre 2010 - 10:21AM
Dow Jones News
Largest global steelmaker ArcelorMittal (MT) said Wednesday that
it's going ahead with a spin-off of its stainless steel division,
planned for 2011, in a move aimed at capturing its growth
potential.
The move could also spur consolidation in the industry, which in
Europe is struggling with overcapacity and rising imports, analysts
said. ArcelorMittal also previously said in a stainless steel
presentation that overcapacity remains a global problem and the
industry needs to consolidate.
ArcelorMittal said it expects the spin-off to result in a
non-cash impairment charge of about $800 million.
Following the spin-off, the stainless steel business will have
around $1 billion of net financial debt, a combination of existing
ArcelorMittal debt transferring with the stainless steel business
and new debt raised by this business.
"Subject to shareholder approval, shares in the stainless steel
business will be distributed to shareholders in the first quarter
of 2011," the company said.
In 2009, ArcelorMittal's stainless steel division posted $258
million earnings before interest, taxation, depreciation and
amortization, or Ebitda, down from $934 million in 2008. On a
five-year average, Ebitda was $760 million, accounting for 5% of
total company Ebitda over the same period.
ArcelorMittal has 2.5-million-tons of stainless steel capacity
in Europe and Brazil. In 2009, it shipped 1.45 million tons of
stainless, down from 1.95 million tons in 2008.
Stainless steel business shares will be listed on Euronext
Paris, Amsterdam and in Luxembourg. In the U.S., they will trade on
the over-the-counter market in the form of NY Registry Shares.
A prospectus will be released later in December.
"This might trigger some consolidation necessary because of the
overcapacity," said Hermann Reith, a steel analyst at BHF Bank. "It
makes it possible for an easier merger."
Reith said he wouldn't be surprised if the company considers a
merger with the likes of Finnish stainless steel producer Outokumpu
Oyj (OUT1V.HE) or Spanish company Acerinox SA (ACX.MC).
While the stainless sector is lagging right now, ArcelorMittal
said recently that its long-term prospects are good. Global
stainless steel demand should grow 8% "long term" with European
demand returning to pre-2008-crisis levels by 2014, it said.
The steelmaker said it expects global demand to total around 25
million tons in 2014, up from around 18 million tons forecast for
2010. The company forecasts 37% of stainless steel demand to come
from China in 2014, 31% from the rest of the emerging markets and
32% from the developed world.
-By Devon Maylie, Dow Jones Newswires; +44 20 7842 9483;
devon.maylie@dowjones.com
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