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World's largest steelmaker in troubled waters

ArcelorMittal, the world's largest steelmaker, launched plans on Friday to raise $3 billion in fresh capital in a bid to reduce debt in the face of weak steel and mining sectors.

The company, twice the size of its nearest rival, simultaneously issued full-year results, with core profit at the bottom of its guidance range, and forecast a further decline in profitability in 2016.

Apart from the capital increase, the company said it would also receive almost $1 billion from the sale of a 35 percent stake in Spanish automotive steel specialist Gestamp.

"This capital raise, combined with the sale of our minority shareholding in Gestamp, will accelerate the company's debt reduction plans and enable us to reduce net debt to less than $12 billion," Chief Executive Lakshmi Mittal said in a statement.

Net debt was $15.7 billion at the end of 2015.


The capital increase would take the form of a rights issue, with the Mittal family committed to take up some $1.1 billion.

ArcelorMittal said it was launching a new five-year Action 2020 plan, designed to improve each of its five business segments and to return core profit (EBITDA) per tonne to above $85. It fell to $62 last year.

The company said it had sold its 28 percent stake in Gestamp Automacion to majority shareholders, the Riberas family, for 875 million euros ($979 million), ending a joint venture formed in 1998.

ArcelorMittal said core profit (EBITDA) dropped by 32 percent to $5.2 billion last year and would be "in excess of" $4.5 billion in 2016.

"2015 was a very difficult year for the steel and mining industries.

Although demand in our core markets remained strong, prices deteriorated significantly during the year as a result of excess capacity in China," Lakshmi Mittal said.

The group, which makes about 6 percent of global steel, said apparent steel consumption in 2016 would be flat to slightly higher, as stronger demand in the United States and Europe would be outdone by declines in China, Brazil and former Soviet states.