Cleary Gottlieb advises ArcelorMittal on $2 billion equity financing

Cleary Gottlieb Steen & Hamilton advised ArcelorMittal on a $2 billion equity and convertible debt offering, as part of a strategy to reduce net debt and improve liquidity for the post-COVID 19 era, according to a lawyer involved.

Luxembourg-based ArcelorMittal, the world’s largest steelmaker by revenue, said the funding would help “build resilience going forward in what remains an uncertain environment”, according to a statement released. on its website.

The agreement includes a $750 million equity issue and a $1.25 billion issue of mandatory convertible notes, or bonds redeemable into shares, according to a statement from Cleary.

Proceeds from the deal will be used to deleverage and improve liquidity by replacing short-term debt with equity and longer-term debt, said John Brinitzer, capital markets partner at Cleary in Paris who advises ArcelorMittal. .

“We’re hearing from bankers that there will be more such deals to come,” Brinitzer said.

“Many companies are increasing their liquidity lines during this time,” he added. “There are companies that really need funding and others that see this as a time to tap into the stock markets when the terms are favourable.”

ArcelorMittal falls into the latter category, Brinitzer said. “The company has been deleveraging for several years and its liquidity position is good,” he said. “With this agreement, they are getting a head start in accessing equity and equity-related markets when the time is right.”

ArcelorMittal shares trade on the New York Stock Exchange, where the benchmark S&P 500 index is down 13% from mid-February, before the COVID-19 crisis hit the United States. United, according to MarketWatch.

The shares are also trading in Paris, Madrid, Amsterdam and Luxembourg, where the benchmarks are down 27%, 34%, 17% and 19%, respectively, since mid-February, according to MarketWatch.

The deal was fully conducted during the recent COVID-19 restrictions. The trades were initiated and priced on May 11, according to a statement from Cleary. The stock offering closed on May 14 and the note offering closed on May 18, according to Cleary’s statement.

In addition to Brinitzer, Cleary’s team included senior attorney Monica Kays in Paris, senior attorneys David Parish and Elizabeth Chang in New York, and attorney Géraldine Bourguignon in Brussels. Gamal Abouali, M&A and capital markets partner in Abu Dhabi, advised the Mittal family, which owns 36% of ArcelorMittal shares, on its participation in the operation.

ArcelorMittal was advised in Luxembourg by partners Philippe Hoss and Thierry Kauffman at Elvinger Hoss Prussen.

Shearman & Sterling advised the syndicate of 13 banks which underwrote the operation, led by BNP Paribas, Crédit Agricole Corporate and Investment Bank, Goldman Sachs & Co. LLC, JP Morgan and Société Générale. The Shearman team included capital markets partners David Dixter and Marwa Elborai in London, tax partner Kristen Garry in Washington, capital markets partner Jennifer D. Morton in New York and environmental adviser Mehran Massih in London and New York. York.

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