ArcelorMittal led consortium reaches agreement regarding Ilva lease and purchase agreement
(Thomson Reuters ONE) -
ArcelorMittal S.A. /
ArcelorMittal led consortium reaches agreement regarding Ilva lease and purchase
agreement
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16 June 2017 - ArcelorMittal ('the Company') and Marcegaglia announce that AM
Investco Italy Srl ('AM Investco') has concluded the exclusive negotiation phase
and reached a binding agreement concerning the lease and obligation to purchase
Ilva S.p.A and its subsidiaries with the Italian Government. The ancillary
documentation will be completed by 30 June. Intesa Sanpaolo will formally join
the consortium before transaction closing.
Strategic highlights
* Unique opportunity to acquire a major, integrated steelmaking asset which is
Europe's largest single steel site, in Europe's second largest steel market
* Robust investment plan to materially improve Ilva's environmental footprint
and realise its full potential
* Identified synergies of ?310 million targeted by 2020 (excludes impact from
fixed cost reductions and volume improvements)
* Ilva expected to be EBITDA accretive to ArcelorMittal in year one, and free
cash flow accretive in year three.
Transaction highlights and key details of AM Investco's plans for Ilva include:
* Purchase price of ?1.8 billion, with annual leasing costs of ?180 million to
be paid in quarterly installments. Ilva's assets will be initially leased by
AM Investco, with rental payments qualifying as down payments against the
purchase price. Start of lease expected around year-end 2017, subject to
regulatory authorisations. Lease period to be minimum of two years.
* Investments of c. ?2.4 billion (c. ?2.1 billion net of Riva Group
contribution) over a seven-year period:
* Industrial CAPEX of c. ?1.3 billion, supporting an extensive industrial
plan; investment programme focussed on blast furnaces, steel shops and
finishing lines
* Environmental CAPEX of c. ?1.1 billion that will ensure Ilva complies
with the Integrated Environmental Authorisation (AIA) as set out by the
Italian Government and will materially improve Ilva's environmental
performance in areas including air emissions and water treatment;
environmental CAPEX includes remediation spend of ?288 million, which
will be funded with funds seized by the Italian Government from the Riva
Group, Ilva's former owners; further intention to introduce breakthrough
low-carbon technologies, including carbon capture and re-use, in the
future; and commitment to use DRI when there are the conditions of
economic sustainability coherent with the industrial plan
* Finished steel shipments to systematically increase to 9.5 million
tonnes, by 2023. Crude steel production limited to 6 million tonnes per
annum until AIA provisions complied with; once achieved, commitment to
restart blast furnace #5 and increase crude steel production to 8
million tonnes per annum; crude steel production to be supplemented by
imported slabs and hot rolled coil, in order to maximise utilisation of
Ilva's finishing facilities, with a commitment to keep at least 10,000
employees for the entire duration of the industrial plan according to
the outcome of negotiations with the unions.
* ?10 million start-up investment in new research and development (R&D) centre
in Taranto, which will initially focus on ensuring a successful deployment
of the industrial, environment and commercial plans, while also ensuring a
smooth transfer of ArcelorMittal R&D intellectual property and knowledge to
enhance operationally efficiency, quality and productivity at all Ilva
plants.
* The assets will be transferred to AM Investco free of long term liabilities
and financial debt and includes ?1 billion of net working capital.
Strategic rationale
* Ilva represents a unique opportunity to add significant value to
ArcelorMittal's European business
* Ilva is the largest, and only integrated, steelmaker in Italy. Its main
production facility in Taranto is strategically well located, sitting next
to one of Europe's largest deep-water ports, hence enabling easy access to
raw materials. Ilva also has significant steel finishing capacity, in
Taranto, Novi Ligure and Genova
* It provides ArcelorMittal with a primary production presence in Italy,
Europe's second largest steel consuming market, and a country in which the
Company currently has no primary steelmaking capacity
* Italy imports between 60 and 70% of its flat steel requirements, in part due
to a decline in Ilva's output because of numerous commercial, quality and
environmental issues it has faced in the recent past; ArcelorMittal believes
that, over time, Ilva's production levels and competitiveness can be
restored
* ArcelorMittal can accelerate Ilva's turnaround through:
* Leveraging ArcelorMittal's high-added value product range, particularly
in the automotive market, and upgrading Ilva's production facilities in
order to extend and improve its product range
* Leveraging economies of scale benefits in areas including procurement
* Opportunity to benchmark against ArcelorMittal's best performing plants
and transfer knowledge and expertise to improve Ilva's operational
performance, quality and efficiency
* Leveraging ArcelorMittal's world-class research and development
offering, and rapidly deploy steelmaking process and product solutions
at Ilva
* Capturing ?310 million of identified synergies.
Commenting Lakshmi N. Mittal, Chairman and CEO, ArcelorMittal, said:
"Today marks an important step in the Ilva sales process. We are keen to get
started and will now focus on reaching completion as soon as possible.
"We have a very sound understanding of what needs to be done to improve the
performance of the company and, importantly, its relationship with stakeholders
and local communities. Our vision is for Ilva to become a benchmark for modern
integrated steelmaking and this will be realised through the implementation of
our industrial and environmental plans, backed up by significant investment. We
have the capital, the technology, the commercial relationships and the
management depth to bring about a positive transformation. Stakeholder
engagement and transparent dialogue will also be critical in enabling Ilva to
rebuild trust with its employees and communities.
"We recognise the trust that is being placed in us as the new owner of Ilva and
will take great care to provide Ilva with the responsible and capable leadership
it deserves and that will be vital for its future success and sustainability."
Aditya Mittal, CEO of ArcelorMittal Europe and group CFO, said:
"Ilva is an important strategic acquisition for ArcelorMittal. It provides us
with a significant production presence in a country in which we have no primary
steelmaking capacity, and is complementary to our existing European business. I
believe that it represents a unique opportunity for us, and am delighted that we
have proved successful with our offer. We have a lot of work to do once the
transaction formally closes and we take up operational control of Ilva, but I
believe that we can improve its performance quickly, and we expect a positive
contribution to EBITDA in year one. Over the longer-term, there is no reason why
Ilva's performance can't be brought in-line with the best performing assets
within our European business."
Antonio Marcegaglia, Chairman and CEO, Marcegaglia, said:
"We are proud to have a chance to contribute to the relaunch of such a
fundamental asset for the country, and look forward to working with the trade
unions and all other stakeholders. I am confident that our consortium has all
the attributes required to deliver a successful turnaround, which will ensure
Ilva makes a positive contribution to the Italian economy, and each of the
communities in which it operates."
The agreement is subject to, and will become effective upon, the satisfaction of
certain conditions precedent, including information and consultation
requirements. The actual sale, and payment of the full purchase price, is
subject to the lifting of seizures against certain Ilva assets by the Court of
Taranto. The asset sale, and payment of the purchase price, will occur on the
later date of the conclusion of the two-year lease period and the lifting of the
seizure of certain assets by the Court of Taranto. Transaction closing is also
subject to EU merger control approval.
ENDS
ArcelorMittal will hold a conference call hosted by Lakshmi N. Mittal, Chairman
and CEO, and Aditya Mittal, CEO of ArcelorMittal Europe and group CFO to discuss
the agreement to acquire Ilva on Monday 19 June at 3:30pm CET (2:30pm UK time
and 9:30am US eastern time). The dial in numbers are:
Location Toll free Toll Participant Code
UK 0800 051 5931 +44 203 364 5807 31204846#
US +1 866 719 2729 +1 240 645 0345 31204846#
France 0800 914780 +33 1 7071 2916 31204846#
Germany 0800 965 6288 +49 692 7134 0801 31204846#
Spain 90 099 4930 +34 911143436 31204846#
Luxembourg 800 26908 +352 27 86 05 07 31204846#
A replay of the conference call will be available for one week by dialing +49
(0) 1805 2047 088, access code 509823#.
About ArcelorMittal
ArcelorMittal is the world's leading steel and mining company, with a presence
in 60 countries and an industrial footprint in 18 countries. Guided by a
philosophy to produce safe, sustainable steel, we are the leading supplier of
quality steel in the major global steel markets including automotive,
construction, household appliances and packaging, with world-class research and
development and outstanding distribution networks.
Through our core values of sustainability, quality and leadership, we operate
responsibly with respect to the health, safety and wellbeing of our employees,
contractors and the communities in which we operate.
For us, steel is the fabric of life, as it is at the heart of the modern world
from railways to cars and washing machines. We are actively researching and
producing steel-based technologies and solutions that make many of the products
and components people use in their everyday lives more energy efficient.
We are one of the world's five largest producers of iron ore and metallurgical
coal. With a geographically diversified portfolio of iron ore and coal assets,
we are strategically positioned to serve our network of steel plants and the
external global market. While our steel operations are important customers, our
supply to the external market is increasing as we grow.
In 2016, ArcelorMittal had revenues of $56.8 billion and crude steel production
of 90.8 million tonnes, while own iron ore production reached 55.2 million
tonnes.
ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT),
Paris (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona,
Bilbao, Madrid and Valencia (MTS).
For more information about ArcelorMittal please visit:
http://corporate.arcelormittal.com/
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Source: ArcelorMittal S.A. via GlobeNewswire
Unternehmensinformation / Kurzprofil:
Datum: 16.06.2017 - 17:01 Uhr
Sprache: Deutsch
News-ID 548377
Anzahl Zeichen: 17766
contact information:
Town:
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Kategorie:
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