ArcelorMittal Needs Capital On Top of Losses (MT)

The world’s largest steel maker, ArcelorMittal (NYSE: MT), is reporting quarterly results lower than even last quarter’s dismal showing. Analysts weren’t expecting much, and they got even less.  To add insult to injury to a loss for shareholders, the giant company has now changed its tune over its need for outside capital.

For the first quarter, the company posted an EPS loss of -$0.78 on revenue of $15.12 billion. Analysts were expecting an EPS loss of -$0.39 on revenue of $16.36 billion. As awful as the earnings number is, it’s still much better than the EPS loss of $-1.39 that the company posted in the fourth quarter of 2008.

ArcelorMittal also announced that it will offer stock and convertible senior notes of about $3 billion “as part of its strategy to accelerate debt reduction and to further strengthen its balance sheet.” As far as how this compares, the market cap is about $32 billion today.  The offerings will come from a shelf registration and pricing has yet to be set. The Mittal family promises to buy at least 10% of the common stock that will be offered.  While this title says that the company needs capital, that is an opinion; but it also flies in the face of what was just recently expressed by management at a time when the company had more than enough information about the malaise of the global economy to realize whether or not any new capital would or should be brought in.

In March, the company issued a press release denying a report in the FT that ArcelorMittal needed to raise capital through a rights issue. But that was then, and this is now.

ArcelorMittal shares are down about 3% this morning, at $23.35. The 52-week range is $15.44-$104.77.

Paul Ausick
April 29, 2009