Thyssen seals U.S. plant sale with sweetened deal: sources

FRANKFURT Fri Nov 29, 2013 11:24am EST

General view of headquarters of Germany's top steelmaker ThyssenKrupp in Essen November 18, 2013. REUTERS/Ina Fassbender

General view of headquarters of Germany's top steelmaker ThyssenKrupp in Essen November 18, 2013.

Credit: Reuters/Ina Fassbender

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FRANKFURT (Reuters) - Germany's ThyssenKrupp (TKAG.DE) has agreed to compensate buyers of its U.S. steel plant for any underperformance in the next few years to seal a long-awaited deal to be outlined later on Friday, two people familiar with the transaction said.

The buyers, a consortium of ArcelorMittal (ISPA.AS) and Nippon Steel & Sumitomo Metal (5401.T), will pay about $1.5 billion for the steel finishing plant in Calvert, Alabama, three people said.

"There is a compensation mechanism in place that could have a negative impact for ThyssenKrupp over the next couple of years," one of the sources said. "In the best case, ThyssenKrupp will not have to grant any compensation."

ThyssenKrupp has been trying for more than a year and a half to find a buyer for its Steel Americas unit - comprised of the U.S. plant and steel slab mill CSA in Brazil - which has drained billions from the company for the past few years.

Analysts said it was not surprising that ThyssenKrupp offered concessions to achieve a sale, but said they would have to see the details to judge if it was a good deal.

The agreement was likely to be announced after the close of U.S. share trading at 1800 GMT, the sources said. The stock market is closing three hours early on Friday due to this week's Thanksgiving holiday.

The deal paves the way for a much-needed capital increase at ThyssenKrupp, with several bankers saying they expected such a move as early as Monday evening.

A spokesman for ThyssenKrupp declined to comment, pointing to the group's November 19 statement that it was in exclusive negotiations on the potential sale of the Calvert plant.

ThyssenKrupp, which is due to publish financial results for its full fiscal year through the end of September on Monday, also said at the time that the talks included a long-term supply contract for CSA in Brazil.

A spokeswoman for ArcelorMittal referred back to comments made at the time of its third-quarter results, when company executives said they remained interested in the plant. She declined to comment further. Nippon Steel was not immediately available for comment.

(Additional reporting by Matthias Inverardi; and Clara Ferreira-Marques; writing by Arno Schuetze and Maria Sheahan; editing by Tom Pfeiffer)

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