ArcelorMittal SA plans rights offer

Johannesburg - ArcelorMittal's South Africa unit said on Friday it intends to raise up to $324 million through a rights offer, as it battles falling steel demand, rising cheap imports and higher costs.

Africa's biggest steel maker said it planned to raise between R4 billion and R4.5 billion ($323.13 million) via the issue of new shares the could dilute the current shareholding by 30 percent.

The cash call, at least 14 percent bigger than the company's market capitalisation, is fully underwritten by the company's parent company.

Shares in ArcelorMittal slumped to their lowest level in 14 years before recouping some losses to trade 1.5 percent lower at R7.60 by 07h06 GMT.

The company, along with industry rivals, have asked the South African government to introduce import and anti-dumping tariffs and to tackle cheap steel coming mainly from China.

ArcelorMittal said it would use the money to pay off debt, which stands at R3.2 billion, with the balance used for operational and capital expenditure.

To cope with weak demand and rising costs, the company has said it would close parts of its Vereeniging Works plant and cut about 283 jobs as part of a review of its operations. The company could also raise cash through issuing bonds, it said.

The future of its biggest plant, Vanderbijlpark Works, was heavily dependent on a raise in tariffs, ArcelorMittal said.

In its third quarter ArcelorMittal lowered its plant capacity due to lower demand and said it expected full-year loss to be 11 times bigger than last year's loss.

REUTERS