World's largest steelmaker ArcelorMittal on Wednesday said it will spin-off its stainless steel division in a bid to unlock value for shareholders.
Under the plan, the company would allot its shareholders a scrip in the stainless steel unit for every existing 20 shares, in the first quarter of 2011.
"The Board of ArcelorMittal confirms it has concluded the assessment of a potential spin-off of the stainless steel business, which it believes will maximise value for shareholders," the Luxembourg-headquartered company said in an e-mailed statement.
"Shareholders will receive one stainless steel business share for every twenty ArcelorMittal shares held on the record date," it said.
Chairman and CEO of the company, Lakshmi Mittal in July had said the group was confident of the future for the stainless business and believed the creation of a separately focused company will create additional value for all shareholders.
The business employs around 11,000 people, about 4 per cent of ArcelorMittal's total workforce.
The widely expected spin-off is likely to result in a non-cash impairment charge of about $800 million, the company said adding, the stainless steel business unit will have a net debt of about $one billion.
It will comprise a combination of existing ArcelorMittal debt that will be transferred besides new loan raised by this business, the statement said.
"As a result, the transaction is expected to be broadly neutral to ArcelorMittal's net debt to EBITDA leverage ratio," it added.
However, the final impairment charge will be assessed by ArcelorMittal and reviewed by its auditors at year end, it said.
Currency fluctuations and change in working capital are the main factors that between now and year-end may influence the final impairment amount, it said.
The company plans to list the stainless steel shares on Euronext Paris, Amsterdam and in Luxembourg.
In the United States, they will trade on over-the-counter market in the form of NY Registry Shares.
However, the company said such shares will not be registered with the US Securities and Exchange Commission or listed on any national securities exchange in the United States.
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