* Had targeted $3.5 bln
* Shares sold at 4.4 percent discount to Tuesday close
* Shares rise 2.2 percent
(Adds comment, detail throughout)
By Ben Deighton and Clara Ferreira-Marques
BRUSSELS, Jan 10 ArcelorMittal has
raised a bigger-than-expected $4 billion selling shares and
convertible bonds to strengthen its balance sheet, leaving the
world's largest steelmaker better placed to cope with tough
"The major concern for Arcelor was the fact that they were
struggling with their balance sheet. They were too leveraged.
With this transaction they remove this balance sheet issue
totally," Petercam analyst Alan Vandenberghe said on Thursday.
ArcelorMittal, whose credit rating was cut to "junk" status
last year, had said on Wednesday it planned to raise $3.5
billion to cut debt to around $17 billion by end-June from $22
billion on Dec. 31.
On Thursday, it said it had issued $2.25 billion in
mandatory convertible notes with a 6 percent coupon, and raised
$1.75 billion selling shares at $16.75, a 4.4 percent discount
to Tuesday's close in New York before the offer was announced.
"It went very well. It was multiple-times covered with a
strong book of demand," a source close to the deal said.
"There was a very big component from the U.S. (investors).
But you do not get deals of this size done without a pretty
broad mix of geographies. There were UK and continental European
investors in there as well."
Shares in ArcelorMittal, which along with the rest of the
steel sector has been squeezed by cooling Chinese demand and a
languishing European market, were up 2.2 percent at 13.37 euros
by 1038 GMT. It hit a 38-week high at 13.67 euros on Monday.
With investors hoping equity markets will rise and companies
seizing the opportunity, the convertible bond market has seen a
resurgence of activity since the European Central Bank said in
September it would buy sovereign debt to save the euro zone.
Mandatory convertible issues - which see bondholders repaid
in shares at maturity rather than cash - can help a company
protect its credit rating because they tend to be treated as
equity by ratings agencies. Such deals are rare, particularly in
Europe, and investors are mostly U.S.-based.
German carmaker Volkswagen raised $3.2 billion through a
mandatory convertible issues in November, the first such issue
by a European corporate since 2009.
ArcelorMittal finance director Aditya Mittal said on
Wednesday of its fundraising: "We are parking the balance sheet
issue now. We are also parking, to some degree, the asset
divestment process". Aditya's father, Lakshmi, is chairman and
chief executive and regularly said to be Britain's richest man.
Analysts estimated the Mittal family, whose stake was almost
41 percent stake before the fundraising, would be diluted to
around 38 percent after buying $300 million of convertible notes
and $300 million in shares.
ArcelorMittal has stepped up debt-cutting efforts since
Standard & Poor's became the first credit rating agency to cut
it to junk in August.
It has slashed its dividend, cut costs and, last week, sold
a 15 percent stake in one of its Canadian iron ore operations to
raise $1.1 billion.
ArcelorMittal also said on Wednesday it was interested in
assets owned by German peer ThyssenKrupp - most likely
a steel plant in Alabama. While Aditya Mittal said this would
not affect the debt-cutting target, Moody's said more needed to
be done to support the company's Ba1 rating.
"ArcelorMittal's declared interest in ThyssenKrupp's Alabama
mill is a fly in the ointment," BNP Paribas analysts said in a
note. "From a capital allocation standpoint, we struggle to see
the positive in acquiring state-of-the-art downstream steel
capacities in the U.S. following the recent sale of a 15 percent
stake in (ArcelorMittal's flagship Canadian iron ore assets)."
(Additional reporting by Kylie MacLellan; Editing by Dan Lalor)