UPDATE 1-Australia's BlueScope aims to raise up to $1 bln

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MELBOURNE, May 5 (Reuters) - BlueScope Steel Ltd (BSL.AX), Australia's largest steelmaker, is looking to raise up to A$1.4 billion ($1 billion) in a steeply discounted share sale and plans to pay no final dividend as it battles tough market conditions.

BlueScope Chief Executive Paul O'Malley said the share sale, its second in five months, plus a new A$1.3 billion syndicated loan note facility, would be used to refinance A$2 billion in debt and give it two years' breathing room on debt deadlines.

"With a stronger balance sheet and the extension of all our material loan maturities for at least two years, we are well positioned for current market conditions and to take advantage of opportunities as conditions improve," he said in a statement.

The shares are being sold at A$1.55 a share, a 40 percent discount to its last traded price of A$2.57 and half the price at which it sold shares in a A$300 million raising last December.

Trading in its shares has been halted pending the completion of the raising.

Analysts had been expecting a further share sale, after BlueScope's rival, OneSteel Ltd (OST.AX), raised A$584 million last month, priced at a 30 percent discount after it slashed its full year earnings forecast.

Bluescope's new shares are being offered to institutions and retail shareholders through a one-for-one entitlement offer worth up to A$1.4 billion, with A$825 million fully underwritten.

The company said that it would not pay a final dividend for the year ending June 30, in line with moves to bolster its balance sheet and maintain flexibility in of current market conditions. ($1=1.359 Australian Dollar) (Reporting by Sonali Paul; Editing by Jonathan Standing)