Aussie steel supplier seeks 300 million U.S. dollars to refinance debt

Australian steel supplier BlueScope Steel is seeking to immediately take advantage of its ratings upgrade by raising 300 million U.S. dollars in unsecured notes to refinance debt as global clouds loom over a supply glut.

BlueScope on Tuesday announced the raising would be undertaken by its U.S. subsidiary BlueScope Finance to institutional offshore investors to diversify funding sources and extend bond maturities.

"BlueScope intends to use the net proceeds to prepay outstanding amounts under its unsecured bridge facility and, to the extent any proceeds remain, for general corporate purposes," the company said in a statement.

The global steel industry has been combatting with the collapse in global iron ore and steel prices, which have seen manufacturing plants closed or moved as creditors sour on indebted companies in the market downturn.

Australian steel producer Arrium Ltd and its 93 subsidiaries were placed in administration in early April with debts exceeding 2.8 billion Australian dollars (2.14 billion U.S. dollars), including over 1 billion Australian dollars (over 765.8 million dollars) in unsecured loans by the nation's "big four" banks.

BlueScope itself has been subject of government support after being granted 60 million Australian dollars (46.31 million dollars) in payroll tax relief to save its ailing Port Kembla steelworks in New South Wales state. The support and 180 million Australian dollars (138.94 million dollars) gained through wage freezes and job losses at the plant saw global ratings agency Moody's Investor Services lift BlueScope' s debt rating from Ba3 to Ba2 in early April.

"The upgrade to Ba2 reflects the strengthening in BlueScope's financial profile, which has undergone significant improvement in the last 2-3 years, with the benefits now appearing," Moody's senior credit officer Matthew Moore said.

Despite surging 11 percent since the credit upgrade, at 1219 local time (AEST), the steel maker's shares had slipped 0.08 Australian cents (0.06 U.S. cents), or 1.18 percent to 6.70 Australian dollars (5.17 U.S. dollars).