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Outokumpu Divests Terni and VDM to ThyssenKrupp

Outokumpu has completed the divestment of the Terni remedy assets, certain service centers and the VDM-business to ThyssenKrupp. Furthermore, Outokumpu has finalized the comprehensive debt financing arrangements. The transaction and measures were originally announced on November 30, 2013.

Divestment of Terni and VDM to ThyssenKrupp completed

In the transaction, the stainless steel mill in Terni, Italy, all related legal entities (Acciai Speciali Terni, Terninox, Aspasiel, Tubificio di Terni and Società delle Fucine), the service centers in Germany (Willich), Spain (Barcelona), Turkey (Gebze) and France (Tours) and the entire VDM-business are divested to ThyssenKrupp in exchange for Outokumpu’s approximately EUR 1.3 billion euro loan note to ThyssenKrupp. The transaction also includes customary working capital and net debt adjustments.

As a result of the transaction and the planned rights offering, Outokumpu’s pro forma(* based net debt is expected to decrease to approximately EUR 1.68 billion and gearing to decrease by approximately 123 percentage points. Outokumpu gearing was 188% at the end of 2013 and would have been 65% on a pro forma basis at the end of 2013.

Mika Seitovirta, CEO of Outokumpu, commented: “This is a major step forward for Outokumpu. This transaction not only addresses the remedy requirements of the European Commission but also significantly strengthens our balance sheet. We are pleased with the valuation for the divested units, and move now forward with absolute focus on the ongoing measures to return Outokumpu back to profitability.”

In conjunction with the completion of the transaction, Outokumpu has settled the outstanding amount of EUR 160 million under the credit facility granted by ThyssenKrupp. Furthermore, as ThyssenKrupp has committed to sell all of its Outokumpu shares, representing a 29.9% stake in Outokumpu, in conjunction with the transaction, the two companies have cut their financial and ownership ties, thereby fulfilling the requirements set by the European Commission.

Following this transaction, Solidium is the largest shareholder of Outokumpu with a 29.9% stake. The second largest shareholder is Ahlström Capital with a 5.0% stake in Outokumpu.

Debt financing arrangements completed

Outokumpu has also completed the extensive debt financing arrangements to strengthen its financial position that were announced on November 30, 2013.

The EUR 900 million revolving credit facility has been signed and is effective as of February 28, 2014. The facility has its maturity in February 2017 and replaces the previous EUR 900 million revolving credit facility signed in July 12, 2013 that would have matured in June 2015. BNP Paribas, Crédit Agricole Corporate and Investment Bank, Danske Bank, Svenska Handelsbanken, JP Morgan, Nordea, Pohjola Bank, The Royal Bank of Scotland, Skandinaviska Enskilda Banken and Swedbank act as Mandated Lead Arrangers and Lenders of the new facility.

The new EUR 500 million liquidity facility has been signed with Skandinaviska Enskilda Banken, Nordea, BNP Paribas, Crédit Agricole Corporate and Investment Bank, Danske Bank, JP Morgan, Pohjola Bank, Svenska Handelsbanken and Swedbank. This facility is effective as of February 28, 2014 and matures in February 2017. The purpose of this new facility is to further strengthen Outokumpu’s liquidity.

Both the EUR 900 million and EUR 500 million facilities include financial covenants on gearing and liquidity.

Furthermore, Outokumpu has extended and amended or refinanced its bilateral loan portfolio of approximately EUR 600 million to mature in February 2017.

The noteholders’ meetings held on February 7, 2014 approved the amendment of the terms and conditions of the notes due in 2015 and 2016. Following the completion of the refinancing measures the amendments to the terms and conditions of the notes will enter into force as of February 28, 2014.

Outokumpu has granted a security package for its debt and bond financing. As security, Outokumpu has pledged the shares of certain of its subsidiary companies for example in Finland, Sweden and the United States as well as certain other fixed assets. In addition, certain subsidiary companies have provided guarantees as security. The security package ensures financing on competitive prices and its benefits clearly surpass its costs. The security package covers most of Outokumpu’s debt financing, including the new EUR 500 million liquidity facility, the EUR 900 million revolving credit facility, bilateral bank loans as well as the two outstanding notes.

Said Reinhard Florey, CFO of Outokumpu: “With the divestment of Terni and VDM we have significantly decreased our debt levels. Furthermore, the renewed financing measures give us a much improved credit profile with longer maturities. Our total financing costs will be clearly lower as a result of the transaction and the planned rights offering. Our strengthened financial position enhances our ability to carry out the ongoing restructuring measures and ramp-ups of our recent investments that all contribute to Outokumpu’s turnaround to profitability.”

*) The pro forma figures reflect certain adjustments to the 2013 financial statements of Outokumpu. The goal is to show the 2013 financial numbers as if the Terni and VDM transaction, the rights issue, and the changes in connection with the financial package had already been done on January 1, 2013 (income statement) or on December 31, 2013 (balance sheet).



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