ArcelorMittal raises $3 billion via rights issue

London: Steel giant ArcelorMittal said it has successfully completed a USD 3 billion rights issue, proceeds of which will be utilised to pare debt.

In February, the Luxembourg-headquartered steelmaker had announced plans to reduce its USD 15.7 billion net debt by nearly a quarter. In March, it came out with a USD 3 billion rights issue to reduce debt after losses widened seven-fold in 2015 to USD 7.9 billion.

In a statement late last night, the world's largest steel manufacturer said there was strong investor support for its rights issue with total subscription rate of 126.9 percent.

"1,229,905,208 new shares were subscribed for through the exercise of primary subscription rights under the rights, representing 97.4 percent of new shares to be issued," it added.

Oversubscription demand amounted to 372,398,986 new shares, representing 11.5 times the number of surplus shares available after satisfaction of the primary subscription rights, and will as a result be satisfied only in part, that is for 32,446,323 new shares, ArcelorMittal said.

"As announced on February 5, 2016, ArcelorMittal intends to use the net proceeds of the rights issue to reduce its indebtedness and to strengthen its balance sheet," it added.

Surplus shares will be allocated to holders who submitted oversubscription requests on a pro-rata basis, in proportion to the number of rights exercised by each holder (excluding the oversubscription), in each case in an amount that does not exceed the maximum number of additional new shares requested.

The company, led by billionaire Lakshmi Mittal, which has been hit by Chinese industry's overcapacity that drove world prices down, reported a decline in net sales at USD 63.58 billion in 2015 as against USD 72.28 billion in 2014.

Its net loss at USD 7.9 billion in 2015 was mostly due to USD 4.8 billion write-downs on the iron ore mining business and a USD 1.3 billion charge on inventory owing to the global steel price plunge. A year earlier, the group made a loss of USD 1.1 billion.

Besides the rights offer, ArcelorMittal will also sell nearly USD 1 billion worth stake in Spanish auto-part maker Gestamp.

Mittal, who owns about 37 percent of ArcelorMittal, will maintain his stake and sign up to its entitlement of the share issue worth about USD 1.1 billion.

It has also announced a five-year strategic roadmap, the ArcelorMittal Action 2020 plan, that sets improvement plans for each of its five business segments and aims to improve EBITDA and free cash flow performance.