ThyssenKrupp Says Unit Sale Taking Longer Than Expected
“We will not make our decisions dependent on reporting deadlines,” Chief Executive Officer Heinrich Hiesinger said yesterday in an interim earnings statement. The Essen-based company previously planned to sign a deal before the end of the fiscal year on Sept. 30.
ThyssenKrupp is in “very advanced negotiations with a leading bidder on the sale,” the company said in the statement. “The group is also in talks with other interested parties.”
ThyssenKrupp is selling the Americas unit and expanding non-steel operations to weather a decline in demand. Lower consumption in the auto and construction industries and higher competition from China has reduced steel prices, leading German peer Salzgitter AG (SZG) to announce a cut of 1,500 staff today. Brazil’s Cia. Siderurgica Nacional SA (CSNA3) is the leading bidder for Steel Americas, people with knowledge of the talks said in May.
“The delay shows that Hiesinger stands with his back to the wall,” Marc Gabriel, an analyst at Bankhaus Lampe KG, said by telephone from Dusseldorf.
ThyssenKrupp has spent 15 months trying to sell its Brazilian and U.S. steel-plant assets. The steelmaker fell 1.3 percent to close at 16.625 euros in Frankfurt, where volume traded was more than twice the three-month daily average.
A share or rights sale remains an option and doesn’t “need to be coupled” with the unit sale, Hiesinger said yesterday.
ThyssenKrupp spent almost 12 billion euros ($15.9 billion) on the Americas plants. After several writedowns, their current book value is 3.4 billion euros. That has resulted in an equity ratio -- or total equity to total equity and liabilities -- of 8 percent by June 30, down from 21 percent a year earlier. The net debt to equity, or gearing, ratio almost tripled to 186 percent.
“The liquidity of the group is well-secured,” Chief Financial Officer Guido Kerkhoff said, citing a figure of 7.2 billion euros available. “We are not in a fire-sale mode.”
ThyssenKrupp said in its interim report that there’s a risk the company will end the fiscal year with a gearing ratio above the limit in its debt covenants of 150 percent.
“Should this be the case, we will begin negotiations with the banks involved to request a waiver of the gearing covenant,” the company said.
An unused 2.5 billion-euro committed credit facility with a group of banks, as well as other loans, may be terminated immediately should gearing exceed 150 percent, the company said.
Adjusted earnings before interest and taxes from continuing operations slid 14 percent to 332 million euros in the three months through June, ThyssenKrupp said in the statement.
That exceeded the 266.8 million-euro average of 17 analysts’ estimates compiled by Bloomberg as all business areas except Industrial Solutions contributed more than the earlier quarter. ThyssenKrupp reported a net loss, including Steel Americas, of 362 million euros compared with a profit of 109 million euros a year earlier.
Steel Americas’ adjusted loss before interest and taxes narrowed to 162 million euros in the quarter from 262 million euros a year earlier. Profit in the Steel Europe unit rose 19 percent to 62 million euros.
Reports of a possible sale of the European unit are “nonsense,” Hiesinger said.
ThyssenKrupp confirmed its forecast for annual adjusted Ebit of about 1 billion euros.
To contact the reporter on this story: Tino Andresen in Dusseldorf at firstname.lastname@example.org