Outokumpu announced today plans to deleverage and strengthen its balance sheet, stabilize its shareholder structure and divest Terni and VDM.
Outokumpu has signed a binding agreement with ThyssenKrupp whereby Outokumpu will sell the Terni remedy assets and the VDM business to ThyssenKrupp. Outokumpu’s loan note to ThyssenKrupp will be cancelled in full amount at closing as consideration for the transaction (loan note was EUR 1,269 million at the end of September 2013).
The transaction includes the stainless steel mill in Terni, Italy and all related legal entities as well as Outokumpu service centers.
The sale of VDM to ThyssenKrupp is the result of the thorough strategic review of VDM announced in May 2013. As part of the transaction, Outokumpu will divest the VDM business to ThyssenKrupp, and all VDM operations with approximately 2.000 employees will be transferred to ThyssenKrupp.
Outokumpu CEO Mika Seitovirta: “The transaction with ThyssenKrupp provides an attractive valuation for Terni and VDM and significantly strengthens our balance sheet. I’m particularly pleased to bring the Terni divestment to a successful conclusion. During the strategic review of VDM, we concluded that synergies between VDM’s special alloys business and Outokumpu’s core stainless business would be very limited. Furthermore, given the attractive valuation of VDM as part of this transaction, the divestiture of VDM to ThyssenKrupp was determined to be the best way forward.”
As a result of the transaction to sell Terni and VDM, Outokumpu’s net debt is expected to decrease by approximately EUR 650 million and gearing to decrease by approximately 30 percentage points on a pro forma basis (Outokumpu gearing was 131.8% at the end of third quarter 2013). Balance sheet and liquidity would be further strengthened by a planned rights issue, additional financing of EUR 500 million and extensions of existing loans and credit facilities.