Bulletin: Latest ArcelorMittal Acquisition Expands Its Global Reach, Without Overstretching Its Balance Sheet

LONDON (S&P Global Ratings) Oct. 30, 2018--S&P Global Ratings today said Luxembourg-based steel maker ArcelorMittal (BBB-/Stable/A-3) would stretch its balance sheet by only a modest amount on acquiring India-based Essar Steel India Ltd. (ESIL) in a joint bid with Nippon Steel&Sumitomo Metal (Nippon). ArcelorMittal and Nippon's joint venture won the right to acquire ESIL. Their bid included an upfront payment of about $5.7 billion to pay down part of ESIL's resolution debt, and a further $1.1 billion of capital to be injected into ESIL to support its turnaround. Earlier on in the process, ArcelorMittal also agreed to pay $1 billion to the financial creditors of Uttam Galva and KSS Petron, bringing the entire transaction cost to $7.8 billion.

...LONDON (S&P Global Ratings) Oct. 30, 2018--S&P Global Ratings today said Luxembourg-based steel maker ArcelorMittal (###-/Stable/A-3) would stretch its balance sheet by only a modest amount on acquiring India-based Essar Steel India Ltd. (ESIL) in a joint bid with Nippon Steel & Sumitomo Metal (Nippon). ArcelorMittal and Nippon's joint venture won the right to acquire ESIL. Their bid included an upfront payment of about $5.7 billion to pay down part of ESIL's resolution debt, and a further $1.1 billion of capital to be injected into ESIL to support its turnaround. Earlier on in the process, ArcelorMittal also agreed to pay $1 billion to the financial creditors of Uttam Galva and KSS Petron, bringing the entire transaction cost to $7.8 billion. FUNDING STRUCTURE ArcelorMittal and Nippon intend to control ESIL via a joint venture. The joint venture will initially inject equity equivalent to one-third of the total investment; the balance of the investment will be debt-funded. Like ArcelorMittal's...

Bulletin