Arcelor made $1.6-bn equity contribution for Essar acquisition

Arcelormittal’s equity contribution for the acquisition of Essar Steel India (now AM/NS India) is $1.6 billion, the company said while announcing its 2019 financial results. Described as its biggest achievement in 2019, Arcelormittal said the acquisition of Essar formed a fifth steel pillar for it.

Even with its equity contribution to the acquisition of Essar, Arcelor’s net spending on merger and acquisition (M&A) in

2019 was offset by portfolio optimisation, including formation of a shipping joint venture. Shortly after completion of the $5.7billion Essar deal, it had signed a deal for sale of 50 per cent of its shipping business stake, to pare debt.

The company said on Thursday its past two years’ net M&A spending was $0.2 billion. Arcelor holds 60 per cent in AM/NS India; the rest is with Nippon Steel.

The two are financing AM/NS India through a combination of one-third partnership equity and twothirds debt. The debt is held by the JV.

On Thursday, ArcelorMittal reported its lowest level of debt at $9.3 billion as of December 31, 2019, since its merger (of Arcelor with Mittal Steel, in 2006).

“Our target of $7 billion net debt is now within sight, assuming working capital release at current market conditions and we make more progress on portfolio optimisation. Then, we are optimistic that we can achieve this target by yearend 2020,” the firm said.

Gross debt remained stable at $14.3 billion as of December 31, compared to September 30; it increased compared to the $12.6 billion at December 31, 2018.

For the quarter ended December, it has reported a net loss of $1.9 bn, compared to a net income of $1.2 billion in the year-ago period. However, the global steel major beat Street expectations on earnings before interest, taxes, depreciation and amortisation (Ebitda), at $925 million for the quarter.