ArcelorMittal Falls Following Announcement Of Capital Raise, Sale Of Gestamp Stake

Shares of ArcelorMittal SA (ADR) MT fell more than 6 percent on Friday after the company announced it plans on raising $3 billion alongside the sale of its minority stake in Gestamp for $1 billion.

ArcelorMittal noted its $3 billion raise will consist of a capital increase by way of a rights issue for shareholders while the Mittal family has committed to take up to its pro-rata entitlement corresponding to approximately $1.1 billion. The company also entered into a standby underwriting commitment with various investment banking firms.

ArcelorMittal noted that its financing and asset sale plans will be used to reduce its net debt by $4 billion to below $12 billion.

"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 US$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.

"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," Mittal added.