ArcelorMittal on Thursday announced a $250 million profit enhancement plan for its stainless steel division, which is to be spun off early next year.
The new entity named as Aperam and to be listed on the stock exchanges of Paris, Amsterdam and Luxembourg, will launch the initiative as part of reducing its costs and increasing productivity over the next two years, ArcelorMittal said in a statement.
“Aperam has also launched an initiative to target management gains and profit enhancement of $250 million over the next two years”, the statement said.
It said the programme, known as the “Leadership Journey”, will focus on cost reductions and increasing productivity.
“Today we announce the launch of the new identity of ArcelorMittal’s stainless steel division under the Aperam name”, CEO of ArcelorMittal’s stainless steel division Bernard Fontana said
“This is a first step for Aperam as a leading independent stainless and speciality steel company,” he said. This would provide “our future investors and the broader capital markets community with important information regarding our company”, he said.
Last week, the company had announced its plans to spin off the stainless steel business, under which its shareholders would get one scrip in the new unit for every existing 20 shares in the first quarter of 2011. It had also said that the new unit will have a net debt of about $1 billion, while the spin off is likely to result in a “non-cash impairment charge” of about $800 million.
“As a result, the transaction is expected to be broadly neutral to ArcelorMittal’s net debt to EBITDA leverage ratio,” it had said.
For the approval of the demerger plan, ArcelorMittal has called a general assembly of its shareholders on January 25, 2011, the statement said.
Besides being listed on the three European stock exchanges, the new entity’s scrips can be traded on the over-the-counter market in the form of NY Registry Shares, it added.
The statement said that Aperam, the new unit, will have operations in 30 countries with the production capacity of 2.5 million tonnes of flat stainless steel in Europe and Brazil.
In 2009, stainless steel segment of ArcelorMittal had revenues of $4.2 billion and shipments of 1.45 million tonnes. Its industrial network is concentrated in six main plants located in Brazil, Belgium and France, with an employee strength of about 9,800 employees.