Australian steel supplier BlueScope Steel has upped its debt raising by 200 million U.S. dollars on strong demand as the company moves to refinance amid looming supply gluts.
Earlier this week, BlueScope announced a 300 million U.S. dollar raising by its U.S. subsidiary BlueScope Finance to institutional investors to diversify funding sources and extend bond maturities, taking advantage of its recently raised credit rating.
"With strong demand from investors, BlueScope has taken the opportunity to increase the size of the offering to 500 million U. S. dollars from the proposed 300 million U.S. dollars," BluesScope said in a statement to the ASX on Friday.
It's believed the interest stems from Australia and the Asian region, according to Fairfax Media.
The company said it would use the net proceeds to repay outstanding debt from its 300 million U.S. dollar unsecured bridge facility and to partly redeem existing senior unsecured notes due 2018. 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.
At 1540 local time (AEST), the steel maker's shares had slipped 6 Australian cents (4.59 U.S. cents), or 0.92 percent to 6.44 Australian dollars (4.93 U.S. dollars).
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