ArcelorMittal sells 50% stake in shipping business to DryLog1 min read . Updated: 23 Dec 2019, 10:48 PM IST
- The stake sale and JV formation will ultimately reduce ArcelorMittal’s net debt by $530 million
- The transaction is expected to close by the end of December
Mumbai: ArcelorMittal, the world’s largest steelmaker, said on Monday that it has sold a 50% stake in its shipping business, Global Chartering Ltd (GCL), to DryLog Ltd, a unit of Greek shipping company Ceres, to pare its debt. The steelmaker will subsequently form an equal joint venture with DryLog.
The transaction is expected to close by the end of December.
GCL currently operates 28 dry cargo vessels, which range from Supramax to Cape Size, 25 of which are on long-term leases and will be transferred into the joint venture, with the remaining three being owned outright.
“The joint venture will benefit from the combination of the two businesses respective knowledge and expertise, and ArcelorMittal’s extensive annual cargo commitments, a portion of which will be handled exclusively by the JV. It will also benefit from DryLog’s ability to optimise transport solutions and its technical and commercial vessel management expertise," ArcelorMittal said in a statement.
The stake sale and JV formation will ultimately reduce ArcelorMittal’s net debt by $530 million, with $400 million on completion and a further $130 million due in early 2020.
In 2018, ArcelorMittal had revenue of $76 billion and crude steel production of 92.5 million tonnes (mt), while own iron ore production reached 58.5 mt. The divestment also comes barely a week after ArcelorMittal, along with Nippon Steel, completed its long-winded ₹42,000 crore acquisition of debt-ridden Essar Steel, one of the most high-profile cases under the new bankruptcy law.