* ThyssenKrupp says to sell 51.5 million new shares
* Sources say shares to be placed at 17.05-17.635 euros
* Capital increase comes after sale of U.S steel plant
* Investors disappointed Steel Americas losses not resolved
* Shares drop more than 8 percent
(Recasts with details of capital increase, adds closing share
By Maria Sheahan and Arno Schuetze
FRANKFURT, Dec 2 ThyssenKrupp
announced plans late on Monday to sell 51.5 million new shares
in a capital increase as it seeks to shore up funds depleted by
a downturn in the global steel market and an ill-advised foray
into the Americas.
ThyssenKrupp's finances have been deteriorating as Chief
Executive Heinrich Hiesinger struggled to extricate the
industrial conglomerate from its loss-making Steel Americas
venture, comprised of a steel slab mill in Brazil and a U.S.
Its plan to produce cheap slabs in Brazil and ship them to
the U.S. for conversion into products for carmakers fell apart
when Brazil's currency rose, hiking labour and production costs,
and demand for cars slowed.
On Friday, ThyssenKrupp announced it had struck a deal to
sell only the U.S. plant in Calvert, Alabama - to ArcelorMittal
and Nippon Steel & Sumitomo Metal Corp - for
$1.55 billion, the bottom end of an expected deal price, leaving
its Brazilian problem unresolved.
ThyssenKrupp's shares dropped 8.5 percent to 17.635 euros on
Monday, their biggest one-day fall in over two years, as the
news left investors wondering how much it must still do to exit
the Brazilian part of Steel Americas.
"It is good that ThyssenKrupp has done something, but I
don't have a lot of faith in the development of the mill in
Brazil," said Joerg Schneider, a fund manager at Union
Investment, which owns shares in ThyssenKrupp.
Steel Americas has cost ThyssenKrupp almost 13 billion euros
in investment and losses over six years.
Two people familiar with the capital increase plan told
Reuters the shares would be placed at between 17.05 euros and
17.635 euros, a discount of up to 3.3 percent to Monday's
closing price, raising up to 907 million euros ($1.23 billion).
Exane BNP Paribas estimated earlier that 730 million euros
would be enough to lower ThyssenKrupp's gearing - the ratio of
its net debt to equity - to less than 100 percent from the 200.6
percent level at the end of September.
The new shares are being placed with institutional investors
in an accelerated bookbuilding led by Commerzbank and
J.P. Morgan, ThyssenKrupp said.
ThyssenKrupp's biggest shareholder the Krupp Foundation,
with a 25.3 percent stake, declined to say whether it would
Sweden-based fund Cevian, which is reportedly looking to
raise its stake from just over 5 percent, said it would not rule
out taking part in the capital increase.
ThyssenKrupp made a third straight annual loss in its
financial year that ended in September, weighed down by Steel
Americas, and recently had to ask banks to waive loan covenants
to avoid losing a major credit line.
Adding to the pain, Thyssen also said on Friday it had been
forced to take back an Italian steel plant and an alloy unit
sold to Outokumpu last year, after the Finnish
steelmaker - trying to overhaul its own finances - returned them
in exchange for cancelling a 1.25 billion euro loan that Thyssen
gave it to finance a wider deal.
The businesses will require investment - analysts say the
Terni plant is loss-making and needs to be restructured, while
the alloy unit, while profitable, is declining. That will
further drain ThyssenKrupp's finances, and selling the
businesses will be tough given that Outokumpu failed to find a
Schneider said he thought CEO Hiesinger had underestimated
the scale of the task he faced in fixing ThyssenKrupp.
Appointed in 2011, Hiesinger has been trying to change the
company from a low-margin steel producer into a maker of
higher-margin products such as elevators, submarines and factory
Amid a steady deterioration in the company's finances and a
general downturn in the global steel market, he has also had to
cope with a Federal Cartel Office investigation that found
Thyssen guilty of fixing prices and dividing the rail-steel
market, which makes rails, points and sleepers.
($1 = 0.7377 euros)
(Additional reporting by Alexander Huebner and Tom Kaeckenhoff;
editing by David Holmes and Tom Pfeiffer)