Outokumpu Completes Divestment of Terni and VDM to ThyssenKrupp
02/28/2014 - Outokumpu has completed the divestment of the Terni remedy assets, certain service centers and the VDM-business to ThyssenKrupp.
Furthermore, Outokumpu has finalized the comprehensive debt financing arrangements. The transaction and measures were originally announced on 30 November 2013.
Divestment of Terni and VDM to ThyssenKrupp completed
In the transaction, the stainless steel mill in Terni, Italy, all related legal entities (Acciai Speciali Terni, Terninox, Aspasiel, Tubificio di Terni and Società delle Fucine), the service centers in Germany (Willich), Spain (Barcelona), Turkey (Gebze) and France (Tours) and the entire VDM-business were divested to ThyssenKrupp in exchange for Outokumpu’s approximately € 1.3 billion loan note to ThyssenKrupp. The transaction also includes customary working capital and net debt adjustments.
As a result of the transaction and the planned rights offering, Outokumpu’s pro forma based net debt is expected to decrease to approximately € 1.68 billion and gearing to decrease by approximately 123 percentage points. Outokumpu gearing was 188% at the end of 2013 and would have been 65% on a pro forma basis at the end of 2013.
Mika Seitovirta, CEO of Outokumpu, commented: “This is a major step forward for Outokumpu. This transaction not only addresses the remedy requirements of the European Commission but also significantly strengthens our balance sheet. We are pleased with the valuation for the divested units, and move now forward with absolute focus on the ongoing measures to return Outokumpu back to profitability.”
In conjunction with the completion of the transaction, Outokumpu has settled the outstanding amount of € 160 million under the credit facility granted by ThyssenKrupp. Furthermore, as ThyssenKrupp has committed to sell all of its Outokumpu shares, representing a 29.9% stake in Outokumpu, in conjunction with the transaction, the two companies have cut their financial and ownership ties, thereby fulfilling the requirements set by the European Commission.
Following this transaction, Solidium is the largest shareholder of Outokumpu with a 29.9% stake. The second largest shareholder is Ahlström Capital with a 5.0% stake in Outokumpu.
Debt financing arrangements completed
Outokumpu has also completed the extensive debt financing arrangements to strengthen its financial position that were announced on 30 November 30 2013.
The € 900 million revolving credit facility has been signed and is effective as of 28 February 2014. The facility has its maturity in February 2017 and replaces the previous € 900 million revolving credit facility signed in July 12, 2013 that would have matured in June 2015. BNP Paribas, Crédit Agricole Corporate and Investment Bank, Danske Bank, Svenska Handelsbanken, JP Morgan, Nordea, Pohjola Bank, The Royal Bank of Scotland, Skandinaviska Enskilda Banken and Swedbank act as Mandated Lead Arrangers and Lenders of the new facility.
The new € 500 million liquidity facility has been signed with Skandinaviska Enskilda Banken, Nordea, BNP Paribas, Crédit Agricole Corporate and Investment Bank, Danske Bank, JP Morgan, Pohjola Bank, Svenska Handelsbanken and Swedbank. This facility is effective as of 28 February 2014 and matures in February 2017. The purpose of this new facility is to further strengthen Outokumpu’s liquidity.
Both the € 900 million and € 500 million facilities include financial covenants on gearing and liquidity.
Furthermore, Outokumpu has extended and amended or refinanced its bilateral loan portfolio of approximately € 600 million to mature in February 2017.
Outokumpu has granted a security package for its debt and bond financing. As security, Outokumpu has pledged the shares of certain of its subsidiary companies for example in Finland, Sweden and the United States as well as certain other fixed assets. In addition, certain subsidiary companies have provided guarantees as security. The security package ensures financing on competitive prices and its benefits clearly surpass its costs. The security package covers most of Outokumpu’s debt financing, including the new € 500 million liquidity facility, the € 900 million revolving credit facility, bilateral bank loans as well as the two outstanding notes.
Said Reinhard Florey, CFO of Outokumpu: “With the divestment of Terni and VDM we have significantly decreased our debt levels. Furthermore, the renewed financing measures give us a much improved credit profile with longer maturities. Our total financing costs will be clearly lower as a result of the transaction and the planned rights offering. Our strengthened financial position enhances our ability to carry out the ongoing restructuring measures and ramp-ups of our recent investments that all contribute to Outokumpu’s turnaround to profitability.”
Divestment of Terni and VDM to ThyssenKrupp completed
In the transaction, the stainless steel mill in Terni, Italy, all related legal entities (Acciai Speciali Terni, Terninox, Aspasiel, Tubificio di Terni and Società delle Fucine), the service centers in Germany (Willich), Spain (Barcelona), Turkey (Gebze) and France (Tours) and the entire VDM-business were divested to ThyssenKrupp in exchange for Outokumpu’s approximately € 1.3 billion loan note to ThyssenKrupp. The transaction also includes customary working capital and net debt adjustments.
As a result of the transaction and the planned rights offering, Outokumpu’s pro forma based net debt is expected to decrease to approximately € 1.68 billion and gearing to decrease by approximately 123 percentage points. Outokumpu gearing was 188% at the end of 2013 and would have been 65% on a pro forma basis at the end of 2013.
Mika Seitovirta, CEO of Outokumpu, commented: “This is a major step forward for Outokumpu. This transaction not only addresses the remedy requirements of the European Commission but also significantly strengthens our balance sheet. We are pleased with the valuation for the divested units, and move now forward with absolute focus on the ongoing measures to return Outokumpu back to profitability.”
In conjunction with the completion of the transaction, Outokumpu has settled the outstanding amount of € 160 million under the credit facility granted by ThyssenKrupp. Furthermore, as ThyssenKrupp has committed to sell all of its Outokumpu shares, representing a 29.9% stake in Outokumpu, in conjunction with the transaction, the two companies have cut their financial and ownership ties, thereby fulfilling the requirements set by the European Commission.
Following this transaction, Solidium is the largest shareholder of Outokumpu with a 29.9% stake. The second largest shareholder is Ahlström Capital with a 5.0% stake in Outokumpu.
Debt financing arrangements completed
Outokumpu has also completed the extensive debt financing arrangements to strengthen its financial position that were announced on 30 November 30 2013.
The € 900 million revolving credit facility has been signed and is effective as of 28 February 2014. The facility has its maturity in February 2017 and replaces the previous € 900 million revolving credit facility signed in July 12, 2013 that would have matured in June 2015. BNP Paribas, Crédit Agricole Corporate and Investment Bank, Danske Bank, Svenska Handelsbanken, JP Morgan, Nordea, Pohjola Bank, The Royal Bank of Scotland, Skandinaviska Enskilda Banken and Swedbank act as Mandated Lead Arrangers and Lenders of the new facility.
The new € 500 million liquidity facility has been signed with Skandinaviska Enskilda Banken, Nordea, BNP Paribas, Crédit Agricole Corporate and Investment Bank, Danske Bank, JP Morgan, Pohjola Bank, Svenska Handelsbanken and Swedbank. This facility is effective as of 28 February 2014 and matures in February 2017. The purpose of this new facility is to further strengthen Outokumpu’s liquidity.
Both the € 900 million and € 500 million facilities include financial covenants on gearing and liquidity.
Furthermore, Outokumpu has extended and amended or refinanced its bilateral loan portfolio of approximately € 600 million to mature in February 2017.
Outokumpu has granted a security package for its debt and bond financing. As security, Outokumpu has pledged the shares of certain of its subsidiary companies for example in Finland, Sweden and the United States as well as certain other fixed assets. In addition, certain subsidiary companies have provided guarantees as security. The security package ensures financing on competitive prices and its benefits clearly surpass its costs. The security package covers most of Outokumpu’s debt financing, including the new € 500 million liquidity facility, the € 900 million revolving credit facility, bilateral bank loans as well as the two outstanding notes.
Said Reinhard Florey, CFO of Outokumpu: “With the divestment of Terni and VDM we have significantly decreased our debt levels. Furthermore, the renewed financing measures give us a much improved credit profile with longer maturities. Our total financing costs will be clearly lower as a result of the transaction and the planned rights offering. Our strengthened financial position enhances our ability to carry out the ongoing restructuring measures and ramp-ups of our recent investments that all contribute to Outokumpu’s turnaround to profitability.”
