Steel Mills

Loan Test Waived for ThyssenKrupp AG

Written by Sandy Williams

ThyssenKrupp AG received permission from lenders to waive a test on its EUR 2.5 billion line of credit.  The loan required ThyssenKrupp to limit its debt to equity ratio to 150 percent, a test that ThyssenKrupp would likely have failed, allowing lenders to cancel the loan.  In June of 2013, the company’s debt ratio was 186 percent. The line of credit was provided by 37 banks in 2007 and matures in July.  

On Wednesday, European investor Cevian Capital announced acquisition of a 5.2 percent stake in ThyssenKrupp AG and expressed confidence in the future potential of the company. ThyssenKrupp stocks rallied 3.6 percent following news of the acquisition. 

The sale of the ThyssenKrupp Americas holdings would help reduce the company’s debt ratio.  In the meantime, Heinrich Hiesinger, CEO of ThyssenKrupp, has been searching for ways to raise cash for the troubled company. On Sept. 19 the company announced the workweek for Steel Europe will temporarily be reduced from 34 hours per week to 31 hours and non-pay-scale employees will lose six days of leave or take a 2.44 percent reduction in monthly salary. The temporary measures will run from October 1, 2014 to October 1, 2018.

ThyssenKrupp has been negotiating to sell their troubled Steel Americas mills for over a year. SMU sources believe CSN is still the company TK AG has been spending the most time with. We are hearing that the deal is for the Calvert, Alabama operations with some form of slab supply agreement out of the CSA mill in Brazil. Our sources are telling us that the “papers are ready to sign” but CSN continues to negotiate. The difficulty is reported to us to be the CSA slab agreement and all of the nuances to that agreement including a clause which gives TK AG the right to suspend the slab supply after one year.

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