March 19, 2013 / 7:31 AM / 5 years ago

UPDATE 3-ThyssenKrupp in talks about raising capital - sources

* Looking at options including share issue - sources

* CEO wins over top investor to share sale plan - paper

* Capital hike over 1 bln euros could come this year-paper

* ThyssenKrupp, top shareholder decline to comment

* Shares down 5.7 percent (Recasts with sources, adds details on management authorisation to raise capital)

By Maria Sheahan and Arno Schuetze

FRANKFURT, March 19 (Reuters) - German steelmaker ThyssenKrupp is looking into ways of strengthening its finances, including a possible share issue, as it battles to cut debt and recover from a disastrous expansion in the Americas, three people familiar with the matter said.

Talks with potential advisers, including investment banks and consultants, are at an early stage, the sources told Reuters on Tuesday. No advisers have been mandated so far and no steps are imminent.

German newspaper Handelsblatt earlier reported ThyssenKrupp might decide to raise over 1 billion euros ($1.3 billion) in a share sale to existing investors after winning over its biggest shareholder to the plan, sending the steelmaker’s stock sliding.

ThyssenKrupp has struggled to reduce its debts with a flagging European economy hitting demand for steel, and has suffered massive losses from a project in the Americas.

The firm has reportedly shied away from raising money via a share issue because of opposition from its biggest investor, the Alfried Krupp von Bohlen und Halbach Foundation, which would see its 25.3 percent stake cut if it did not take part in the sale.

But Handelsblatt cited company sources as saying Chief Executive Heinrich Hiesinger had won over the foundation’s 99-year-old patriarch, Berthold Beitz, and that a share sale could come this financial year, which ends in September.

A spokesman for ThyssenKrupp declined to comment, as did the foundation. As recently as January, ThyssenKrupp said it did not need a capital increase.

At 1440 GMT, ThyssenKrupp shares were down 5.7 percent at 17.32 euros, the biggest drop by a European blue-chip stock .


Last year, ThyssenKrupp posted a 4.7-billion-euro loss due to a writedown on the value of its Steel Americas project. Net debt climbed to 5.8 billion euros from 3.6 billion and the group’s equity capital shrank to 11.8 percent of its total assets, from 23.8 percent.

“Given the weak situation of the balance sheet a capital hike would make sense,” DZ Bank analyst Dirk Schlamp said, adding he expected a further writedown on Steel Americas.

The quagmire in the Americas cost former Chief Executive Ekkehard Schulz his job and prompted Beitz to oust supervisory board chairman Gerhard Cromme this month. The board on Tuesday elected former Henkel chief executive Ulrich Lehner to replace Cromme.

ThyssenKrupp’s annual financial report shows its management has the authorisation to issue up to about 195 million shares, worth almost 3.4 billion euros at its current share price.

MM Warburg analyst Bjoern Voss said the Krupp foundation would likely want ThyssenKrupp to issue no more than 135 million shares - which would yield about 2.3 billion euros at current prices - to ensure its stake remains at least 20 percent.

One adviser who has worked with ThyssenKrupp in the past but has no current mandate said the firm was also meeting advisers to discuss ideas for further measures in its strategic overhaul.

CEO Hiesinger is trying to turn the sprawling steel giant into a leaner company focused less on slabs and more on technology, plant parts and elevators.

The banker said he could imagine that ThyssenKrupp might make acquisitions to strengthen its elevators and plant engineering businesses. “I do not see much scope in the steel, automotive or components units,” he said.

$1 = 0.7717 euros Additional reporting by Philipp Halstrick; Editing by Mark Potter

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