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ArcelorMittal Sets Record Date for $3 Billion Capital Raise

ArcelorMittal MT has declared the record date for its proposed capital increase by way of a rights offering. Through the offering, announced in Feb 2016, the present shareholders of the company will be granted preferential rights to subscribe for ArcelorMittal ordinary shares. The company expects to issue a number of new ordinary shares in the rights offering that will enable it to raise the euro equivalent of roughly $3 billion.

ArcelorMittal has called for an extraordinary general shareholders meeting on Mar 10, 2016 to consider an increase in its authorized share capital that is needed to permit the launch of the proposed rights offering along with other things. The launch of the rights offering is also subject to the approval of the European securities prospectus by the Luxembourg supervisory authority for the financial sector along with market and other conditions.   

The record date for ArcelorMittal’s shares is expected to be Mar 14, 2016 at the close of business in each applicable market where it is traded. Each record holder of the company’s stock will be allocated one right per existing ArcelorMittal share held as of the record date.  

ArcelorMittal expects that the planned capital increase 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 posted a net loss of $6.7 billion or $3.72 per share in fourth-quarter 2015 compared with a net loss of $711 million or 40 cents per share in the year-ago quarter. The bottom line was hit by hefty impairment charges (of $4.7 billion) and lower iron ore and steel prices.

Adjusted net loss for the quarter was $0.4 billion. In the year-ago quarter, the company recorded adjusted net income of $0.1 billion. Adjusted loss of 20 cents per share for the reported quarter was narrower than the Zacks Consensus Estimate of a loss of 26 cents.

ArcelorMittal’s net loss for 2015 was $7.9 billion, or $4.43 per share, compared with a net loss of $1.1 billion, or 61 cents per share in 2014. Adjusted net loss for the full year was $0.3 billion. In 2014, the company had reported adjusted net income of $0.4 billion.

ArcelorMittal currently has a Zacks Rank #4 (Sell).

Some better-ranked stocks in the basic materials sector are Usinas Siderurgicas de Minas Gerais S.A. USNZY, AngloGold Ashanti Ltd. AU and Golden Star Resources, Ltd. GSS. Each of these stocks carry a Zacks Rank #2 (Buy).

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