ArcelorMittal Sells 50% Stake In Shipping Business To DryLog
Zacks Investment Research | Dec 23, 2019 09:55PM ET
ArcelorMittal (NYSE:MT) has inked a share purchase agreement with DryLog Ltd to divest 50% stake in its fully-owned shipping business, Global Chartering Limited (GCL). Subsequently, the company will establish a 50:50 shipping joint venture (JV) with DryLog. ArcelorMittal expects this transaction to close before the end of 2019.
The sale of stake and JV formation are likely to impact ArcelorMittal’s net debt by $530 million, including $400 million on deal completion and an additional $130 million due in early 2020. The latest deal underpins the company’s commitment to unlock value worth up to $2 billion from its portfolio of assets by mid-2021.
The JV will exclusively handle a portion of ArcelorMittal’s extensive annual cargo commitments. Moreover, the JV is likely to gain from DryLog’s technical and commercial vessel management expertise, as well as transport solutions optimization abilities. These factors will enable the JV to boost operations and position itself as a significant player in the international shipping industry.
Notably, GCL operates 28 dry cargo vessels ranging from Supramax to Cape Size. Currently, 25 of these dry cargo vessels are on long-term leases, which will be transferred into the JV. Also, the remaining three will be owned outright.
ArcelorMittal’s shares have lost 11.2% in the past year against the 1.9% rise of the Original post
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