ThyssenKrupp Falls After Hybrid Bond Report: Frankfurt Mover

ThyssenKrupp AG fell to the lowest level in seven weeks after Handelsblatt said Gemany’s largest steelmaker plans a hybrid bond of as much as 1 billion euros ($1.3 billion).

The stock tumbled as much as 2.2 percent to 15.405 euros, the lowest intraday level since July 15, and traded 0.7 percent lower at 15.645 euros at 12:24 p.m. in Frankfurt.

The Essen, Germany-based company plans to issue the bond after it sells new stock, Handelsblatt reported, citing people familiar with the matter. The share issue would equal less than 10 percent of the stock now outstanding, and may be sold to a hedge fund, it said. The value of the shares would be about 800 million euros at current prices. Nicola Roettger, a spokeswoman at ThyssenKrupp, declined to comment on the company’s plans.

Chief Executive Officer Heinrich Hiesinger “seems to be in an impasse and is testing the market reaction,” Hans-Peter Wodniok, an analyst at Fairesearch GmbH & Co KG, said by phone from Kronberg near Frankfurt. “That’s not the necessary all-out attack. The company would need four billion euros or more. Hiesinger has to deliver and doesn’t do so.”

ThyssenKrupp has for more than 15 months tried to sell its Steel Americas unit on which it spent almost 12 billion euros. After several writedowns, the current book value of the Brazilian and U.S. steel-plant assets is 3.4 billion euros. That 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.

Wodniok doesn’t consider hybrid bonds as equity while it is handled as equity on the balance sheet, he said.

After earlier not having ruled out a capital increase Hiesinger confirmed yesterday with the supervisory board that there will be one after the disposal of Steel Americas, Handelsblatt reported today.

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