Steel giant ArcelorMittal MT said that its subsidiary ArcelorMittal USA plans to enter into a new, 5-year senior secured asset-based revolving credit facility worth up to $1 billion, which is expected to close in second-quarter 2016.
This loan facility, which is not being guaranteed by ArcelorMittal, will be secured by inventory and certain other working capital and associated assets of ArcelorMittal USA and some of its subsidiaries in the U.S. It will be utilized for general corporate purposes of ArcelorMittal USA and its subsidiaries. ArcelorMittal does not plan to pursue additional secured financing beyond this facility.
ArcelorMittal has also successfully completed its $3 billion rights issue. The company plans to use the net proceeds of the rights issue to reduce its debt and strengthen its balance sheet.
ArcelorMittal expects that the capital increase (through the rights issue) along with the sale of its minority stake in Spain-based automobile parts maker Gestamp Automocion for roughly $1 billion would help it reduce its net debt by $4 billion to less than $12 billion. The company ended 2015 with net debt of $15.7 billion.
ArcelorMittal remains highly focused on reducing debt, lowering costs and improving efficiency. The company also remains committed to divest its non-core assets and increase focus on important operations. The company sees cash savings of more than $1 billion in 2016, partly due to lower capital spending and reduced interest expenses resulting from debt cuts.
ArcelorMittal’s shares fell around 2.3% to close at $4.69 on Monday.
ArcelorMittal is a Zacks Rank #3 (Hold).
Better-ranked stocks in the steel and metals space include AK Steel Holding Corporation AKS, Companhia Siderurgica Nacional SID and Carpenter Technology Corp. CRS, all sporting a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
AK STEEL HLDG (AKS): Free Stock Analysis Report
CIA SIDERUR-ADR (SID): Free Stock Analysis Report
ARCELOR MITTAL (MT): Free Stock Analysis Report
CARPENTER TECH (CRS): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research