Johannesburg - ArcelorMittal South Africa rose the most on record after the continent’s largest steelmaker said it will sell stock at a premium in its plan to raise as much as R4.5 billion ($320 million).
AMSA, as the ArcelorMittal unit is known, will issue more than 692 million shares at R6.50 each, the Vanderbijlpark, Gauteng province-based company said in a statement Tuesday.
While this is a 37 percent discount to the 30-day volume- weighted average price to Nov. 5, the day before the plan was announced, it’s 56 percent more than Monday’s closing level of R4.17. The stock surged as much as 50 percent, the most since the producer’s listing in 1995.
The company will use the proceeds of the share sale “to reduce current debt levels, fund near-term investment in capital expenditure and positively impact ArcelorMittal’s ability to raise future debt funding,” it said.
AMSA is raising cash as South African steelmakers are struggling to compete with an increase in subsidized Chinese imports. Local producers including Evraz’s South African unit and Scaw Metal Group have announced plans to cut a total of more than 2 400 jobs and requested the government for protection against offshore supplies.
ArcelorMittal, which owns 46.8 percent of the company, will fully underwrite the offer, AMSA said November 6. The share issue will open December 28 and close on January 15, it said.
Shares in the South African steelmaker climbed 50 percent to R6.24 at 2:20 p.m. in Johannesburg.
BLOOMBERG