Germany's ThyssenKrupp announced plans for a much-needed capital increase after striking a deal to sell its US steel plant to ArcelorMittal and Nippon Steel & Sumitomo Metal Corp for $1.55 billion (£946.85 million).
It said late on Friday it would increase its capital by as much as 10 per cent in a transaction excluding subscription rights, which would raise close to euro 1 billion (£830.78 million) at its current share price.
ThyssenKrupp has been trying for more than a year and a half to find a buyer for its Steel Americas unit - comprised of the US steel finishing plant and steel slab mill CSA in Brazil - which has drained billions from the company for the past few years and been an obstacle to raising fresh funds.
ArcelorMittal and Nippon Steel are financing the purchase, which ArcelorMittal said would yield about $60 million of annual savings, through a combination of equity and debt.
The plant will sell about half of its production to the North American automotive industry, while the other half will go to the energy sector, where a boom in natural gas exploration has boosted demand for steel pipes and tubes.
"The plant is new and our biggest advantage is its location. There are many Japanese automakers' plants nearby," Nippon Steel Executive Vice President Shinya Higuchi told a news conference in Tokyo early on Saturday.
It said late on Friday it would increase its capital by as much as 10 per cent in a transaction excluding subscription rights, which would raise close to euro 1 billion (£830.78 million) at its current share price.
ThyssenKrupp has been trying for more than a year and a half to find a buyer for its Steel Americas unit - comprised of the US steel finishing plant and steel slab mill CSA in Brazil - which has drained billions from the company for the past few years and been an obstacle to raising fresh funds.
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To avert a drop-off in business at CSA, which has been sending part of its output to the US plant in Calvert, the sale includes a six-year agreement for the plant to buy 2 million tonnes of steel slab per year from CSA, or 40 per cent of the Brazilian mill's capacity.
ArcelorMittal and Nippon Steel are financing the purchase, which ArcelorMittal said would yield about $60 million of annual savings, through a combination of equity and debt.
The plant will sell about half of its production to the North American automotive industry, while the other half will go to the energy sector, where a boom in natural gas exploration has boosted demand for steel pipes and tubes.
"The plant is new and our biggest advantage is its location. There are many Japanese automakers' plants nearby," Nippon Steel Executive Vice President Shinya Higuchi told a news conference in Tokyo early on Saturday.