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Bid target Arcelor takes 4 bn euro loan

Written by: Staff

Madrid, Apr 26: European steel group Arcelor laid claim to external and internal cash on Wednesday as it tries to win flexibility and shore up its defences against a hostile bid from Mittal Steel.

The steel group said it had signed a 4 billion euro (.97 billion) three-year loan with a group of banks.

In a statement, Arcelor said the loan would be used to ''maintain financial flexibility after its recent acquisitions''.

No further details were available.

Arcelor shares fell 0.1 percent to 34.07 euros.

The loan came as Arcelor's finance director told a Spanish newspaper the group would generate 4 billion euros (.97 billion) a year until 2008 which could be returned to shareholders or used for further acquisitions.

In Wednesday's edition of Cinco Dias, Gonzalo Urquijo also said Arcelor had room to raise its gearing to 50 percent from 30 percent now.

Urquijo said growth could come via acquisitions in eastern Europe, Ukraine, China, Turkey, South America and southeast Asia and that Arcelor could pay in any mixture of cash and shares.

In France, a newspaper reported that the timetable for Mittal's bid was clouded by potential antitrust concerns in the United States, where Mittal could hold a dominant position if it is unable to sell Arcelor's Dofasco unit as it plans.

Arcelor this month attempted to block Mittal's plans for Dofasco by locking it inside a specially created Dutch foundation, which would be unable to sell it for five years.

The move to hand over control is however likely to fuel debate at an Arcelor shareholders' meeting on Friday.

Le Parisien newspaper also reported that regulators had asked Mittal for more information aimed at reconciling its accounts with newly adopted IFRS accounting standards.

Mittal was not immediately available for comment.

Urquijo reiterated that Arcelor would study an increased offer from Mittal if it were composed entirely of cash -- something Mittal has ruled out for now.

Mittal's tentative cash and paper offer is worth 20.5 billion euros or 32.09 euros a share at Wednesday's opening prices and three quarters of the payment is in Mittal stock.

Mittal has also said it will cut the cash component of the offer to make up for Arcelor dividends above market forecasts.

Arcelor said its 4 billion euro loan was signed by ABN AMRO, Credit Mutuel-CIC, Dresdner Bank, Fortis Bank and Natexis Banques Populaires. Twelve other banks had offered to take part in the syndication of the loan, which was 70 percent subscribed.


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