By Alex MacDonald
LONDON--ArcelorMittal (MT) said Tuesday it would buy back a
chunk of debt that became much more expensive after the rating firm
Moody's changed its rules for hybrid bonds last year.
In other measures to strengthen its balance sheet, the
steelmaker is also reducing two credit facilities.
ArcelorMittal said it will redeem $650 million in subordinated
perpetual capital securities on Feb. 20. Such bonds carry no
maturity date, meaning they pay coupon interest until the issuer
decides to redeem them.
The notes were issued in September 2012 and carry a coupon of
8.75%. They will be redeemed at 101% of the principal, plus any
interest accrued.
Moody's last year changed the way it treats such debt when
evaluating the creditworthiness of some companies. It now regards
the debt as either equity or debt but not a mixture of the two as
previously.
Separately the Luxembourg-based steelmaker said it has reduced
its syndicated revolving credit facility from $6 billion to $3.6
billion. The facility dates to March 2011 and is due to mature in
2016.
ArcelorMittal also reduced a syndicated revolving credit
facility dating to May 2010 from $4 billion to $2.4 billion, and it
extended the maturity date of that facility to November 6,
2018.
Both credit facilities are intended to be used for general
corporate purposes.
The company had net debt of $17.8 billion as of Sept. 30 and
aims to reduce that to $15 billion in the medium term.
Also Tuesday, ArcelorMittal said it has extended the conversion
date for $1 billion worth of mandatory convertible bonds that were
placed with Credit Agricole in December 2009 by one of the
steelmaker's subsidiaries. The steelmaker used the proceeds to make
loans to Turkish steelmaker Erdemir (EREGL.IS) and China Oriental
Group Ltd (CUGCF), two listed companies in which ArcelorMittal has
minority equity stakes.
The mandatory conversion date of the bond into preferred shares
of ArcelorMittal's subsidiary has been extended to Jan 29 and
similarly the loans to those two listed companies have also been
extended, the steelmaker said.
-Write to Alex MacDonald at alex.macdonald@wsj.com
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