ArcelorMittal (NYSE:MT) Spinning Off Inox Stainless Steel Unit

The board of directors of ArcelorMittal (NYSE:MT) have made the decision to spin off Inox, the stainless steel unit of the company.

Canaccord commented, "The Board of ArcelorMittal confirms that it has decided to proceed with the spin-off of the stainless steel business, Inox, which it believes will maximize value for shareholders. Subject to shareholder approval, shares in the stainless steel business will be distributed to shareholders in the first quarter of 2011. Shareholders will receive one stainless steel business share for every twenty ArcelorMittal shares held on the record date. Stainless steel business shares will be listed on Euronext Paris, Amsterdam and in Luxembourg. In the U.S., they will trade on the over-the-counter market in the form of NY Registry Shares. The stainless steel business shares have not been and will not be registered with the U.S. Securities and Exchange Commission or listed on any national securities exchange in the U.S. The spinoff is expected to result in a non-cash impairment charge for ArcelorMittal of approximately $800 million. Following the spin-off, the stainless steel business will have approximately $1 billion of net financial debt, which will comprise a combination of existing ArcelorMittal debt transferring with the stainless steel business and new debt raised by this business. As a result, the transaction is expected to be broadly neutral to ArcelorMittal's net debt to EBITDA leverage ratio. Inox, with plants in Belgium and Brazil, produced 1.59 million metric tons of steel in the first nine months of the year, generating revenues of $4.18 billion, or 6.8% of ArcelorMittal’s total revenue. The division reported a $219 million operating profit in the period. Last year, it posted a $172 million operating loss, losing $119 on every ton it produced."

ArcelorMittal was trading at $35.52, down $0.08, or 0.22 percent, as of 11:49 AM EST.