BlueScope Steel to raise $1 billion in capital to pay off debt

Plunging demand for steel is forcing Australia's largest steel maker, Bluescope Steel to go to the market once again in five months to raise as much as $1 billion (A$1.4 billion) through a share sale, in order to pay off its A$2.1 billion debt.

The Melbourne-based steelmaker said in a statement today that it is planning to sell up to $1 billion (A$1.4 billion) in a one-for-one stock sale to existing shareholders at A$1.55 each, which is at a 40 per cent discount to its last traded price of A$2.57.

BlueScope is offering about 60 per cent of the new shares to institutions while retail shareholders will be offered 40 per cent.

Managing director and CEO Paul O'Malley said in a statement, "With a stronger balance sheet and the extension of all our material loan maturities for at least two years, we are well positioned for current market conditions and to take advantage of opportunities as conditions improve."

The company had gone to the market in December and February, where it had raised A$413 million and the steelmaker said that it intends to refinance its existing debt of A$2.1 billion, which is maturing from December this year to January 2012, from the proceeds of this new share sale and still have some money left over to boost liquidity.

BlueScope, whose market valuation is A$2.3 billion, was able to obtain a $1.275 billion syndicated loan facility with three Australian banks and one foreign bank since lenders had confidence in the company.