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ArcelorMittal: new plan features $4 billion debt reduction, $2 billion cash flow generation
By Lisa Kerner
Charlotte, N.C., Feb. 5 – ArcelorMittal announced its Action 2020 plan “to structurally improve its EBITDA,” said chief financial officer Aditya Mittal during the company’s earnings call on Friday.
The plan is above the company’s ongoing management gains plan and seeks to deliver EBITDA greater than $85 million per ton and $2 billion of free cash flow generated annually by 2020, Mittal said.
The five-year plan targets a $4 billion debt reduction through a $3 billion capital raise. Also, the company would receive $1 billion of proceeds from the sale of its 35% stake in Gestamp, which is expected to close by the end of June.
The $4 billion would reduce pro forma net debt as of Dec. 31 by $4 billion, to less than $12 billion.
During the first half of 2016, ArcelorMittal expects to complete a capital increase by way of a rights issue for ArcelorMittal shareholders. Additionally, the Mittal family has committed to take up its pro-rata entitlement corresponding to about $1.1 billion.
Also, ArcelorMittal has entered into a standby underwriting commitment with Goldman Sachs International, BofA Merrill Lynch and Credit Agricole Corporate and Investment Bank to underwrite the capital increase for the remaining amount, subject to customary conditions.
ArcelorMittal ended the quarter on Dec. 31 with EBITDA of $1.1 billion. EBITDA at year end was $5.2 billion.
Net debt at year end was $15.7 billion, roughly flat year over year.
Liquidity was up quarter over quarter at about $10 billion, compared to $9.6 billion.
ArcelorMittal is a Luxembourg-based steel and mining company.
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