ArcelorMittal sells 50% stake of its shipping business to DryLog
By MYBRANDBOOK
The largest steel maker, ArcelorMittal has inked a share purchase agreement with DryLog to sell its 50% stake in Global Chartering (GCL), the steel major’s wholly-owned shipping business.
With this fulfil its commitment to unlock up to $2 billion from its asset portfolio by the middle of 2021. This will also lead to a 50:50 shipping joint venture will be formed with DryLog. The asset divestment at the group level, announced by the company earlier this year, comes close on the heels of the conclusion of the $5.7 billion Essar Steel deal last week.
ArcelorMittal and Nippon Steel jointly acquired Essar Steel under the Insolvency and Bankruptcy Code (IBC). It is a joint venture between both the companies (AM/NS India). ArcelorMittal holds 60% in AM/NS India while the rest is with Nippon Steel. The two companies are financing AM/NS India through a combination of one-third partnership equity and two-thirds debt. The debt will be held by the joint venture.
ArcelorMittal’s equity contribution, however, works out to around $1.14 billion, which is likely to be the net debt at the group level. As of September 30, 2019, Arcelor’s net debt was $10.7 billion. It is committed to bringing it below $7 billion.
The stake sale will effect ArcelorMittal’s net debt by $530 million. In a statement issued by the company it is said that the figure will become $400 million on completion of the stake sell and a further $130 million will be due in early 2020. The DryLog transaction is expected to close before the end of 2019.
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