August 23, 2013 / 8:21 AM / 4 years ago

ThyssenKrupp talks with hedge funds on share issue

DUESSELDORF, Germany (Reuters) - German steelmaker ThyssenKrupp (TKAG.DE), which has said it risks breaching loan covenants, is in talks with hedge funds to persuade them to buy into an issue of new shares, two people familiar with the matter said.

One of the sources, who spoke on condition of anonymity because the negotiations are confidential, told Reuters on Thursday the talks were at an advanced stage.

Earlier in the day, German monthly Manager Magazin cited company sources as saying Chief Executive Hiesinger and Finance Chief Guido Kerkhoff first approached some hedge funds in March and revived talks about a cash call in mid-July.

ThyssenKrupp needs capital as it aims to shift its strategy from steelmaking to technology, while struggling to sell its unprofitable Steel Americas unit that consists of steel mills in Brazil and the U.S. state of Alabama.

The company has not yet specified whether the mooted capital increase would include a rights issue for existing shareholders.

A spokesman for ThyssenKrupp declined to comment and pointed to previous comments from its management saying a capital increase was an option.

CEO Hiesinger said last week the group could seek cash from shareholders even before it sells Steel Americas if customers grew too concerned about ThyssenKrupp’s finances.

    Funds overseen by George Soros and by John Paulson were named by Manager Magazin as having been contacted. Other investors who could be interested include David Einhorn’s Greenlight Capital, York Capital as well as Andreas Holvorsen’s Viking Global Investors, according to the magazine.

    Shares in the company extended their gains and were up 4.3 percent at 16.30 euros at 1405 GMT, the second-largest gainer on the blue-chip DAX .GDAXI index, which was up 1.4 percent.

    Greenlight Capital declined to comment. Soros Fund Management, Paulson & Co, Viking and York Capital Management did not immediately respond to requests for comment.

    Writing by Ludwig Burger and Madeline Chambers; Additional reporting by Svea Herbst and Tommy Wilkes; Editing by Philipp Halstrick and Anthony Barker

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