Further to the announcement on July 28, 2010, the board of directors at ArcelorMittal on December 8 confirmed that it has concluded the assessment of a potential spin-off of the stainless steel business. Based on this assessment, the board has decided to proceed with the spin-off of the stainless steel business which it believes will maximize value for shareholders. Subject to shareholder approval, shares in the stainless steel business will be distributed to shareholders in the first quarter of 2011.
Shareholders will receive one stainless steel business share for every 20 ArcelorMittal shares held on the record date. Stainless steel business shares will be listed on Euronext Paris, Amsterdam and in Luxembourg. In the United States, they will trade on the over-the-counter market in the form of NY Registry Shares. A prospectus describing the stainless steel business and transaction will be published later this month.
The spinoff is expected to result in a non-cash impairment charge of approximately $800 million as the stainless steel business will be accounted for in accordance with IFRS 5 applicable to assets held for distribution. The final impairment charge will be assessed by ArcelorMittal and reviewed by its auditors as at year end. Currency fluctuations and change in working capital are the main factors that between now and year end may influence the final impairment amount. No such impairment charge would be expected had the stainless steel segment remained in the scope of activities of ArcelorMittal.
Following the spin-off, the stainless steel business will have approximately $1 billion of net financial debt which will comprise a combination of existing ArcelorMittal debt transferring with the stainless steel business and new debt raised by this business. As a result, the transaction is expected to be broadly neutral to ArcelorMittal’s net debt to EBITDA leverage ratio.
The stainless steel business shares have not been and will not be registered with the U.S. Securities and Exchange Commission or listed on any national securities exchange in the United States.
