ArcelorMittal To Purchase Notes Worth Up To $1.5B In Cash

Steel giant ArcelorMittal (NYSE:MT) has announced the launch of its tender offers to purchase for cash, for a total purchase price of up to $1.5 billion (the "Maximum Tender Cap"), its outstanding 6.125% notes due 2018, 9.850% notes due 2019, 5.125% notes due June 2020, 5.250% notes due August 2020, 5.500% notes due 2021 and 6.250% notes due 2022.

Subject to the Maximum Tender Cap, the amount of a Series of Notes that is purchased in the offers on the applicable settlement date will be based on the numerical order of priority for such Series, subject to the proration arrangements applicable to the offers.

The Notes may be validly tendered at any time on or before Oct 4, 2016, unless extended.

ArcelorMittal expects to fund the offers with existing cash resources and potential drawings under existing credit facilities. The company has made the offers to reduce gross debt through the early repayment of certain of its short to medium-term maturing bonds.

ArcelorMittal’s long-term debt was about $14 billion as of Jun 30, 2016 as against roughly $18 billion as of Jun 30, 2015. In May 2016, ArcelorMittal USA entered into a new, five-year senior secured asset-based revolving credit facility of up to $1 billion. This facility will be utilized for general corporate purposes of ArcelorMittal USA and its subsidiaries.

The company’s cash requirements are estimated to total $4.5 billion for 2016, a more than $1 billion reduction from the 2015 level. This includes lower capital expenditure of about $2.4 billion compared with $2.7 billion in 2015, lesser interest expenses of roughly $1.1 billion as against $1.3 billion in 2015, no dividend with respect to financial year 2015, and reduced cash taxes.

ArcelorMittal currently sports a Zacks Rank #1 (Strong Buy).

Other favorably-ranked companies worth considering in the steel space include Angang Steel Company Limited ANGGY, Gerdau S.A. (NYSE:GGB) and Ternium S.A. (NYSE:TX) . All three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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