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AK Steel shares hits 8 year low as metal prices decline
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Sunday, 18 Nov 2012
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Bloomberg reported that AK Steel Holding Corporation, a supplier of the metal to US builders and automakers, forecast lower prices and a wider than estimated loss while announcing the sale of equity and debt to repay a credit facility.

AK Steel said that the fourth quarter loss excluding a tax expense will be 34 cents to 39 cents a share. That trailed the 21 cent average of 17 analysts' estimates compiled by Bloomberg. AK said separately it will offer USD 350 million of secured notes, as much as USD 143.8 million of exchangeable notes and sell as many as 28.8 million shares to repay the facility and for general corporate purposes.

AK dropped 18% to USD 4.50, the biggest decline since November 20th 2008 and the lowest closing price since June 2004. The shares have tumbled 46% in 2012. The company operates a plant in Butler.

Mr Kuni Chen an analyst at CRT Capital Group said that average steel selling prices will be down 5% compared with the third quarter, in part because of worsening global business conditions, and lower raw material costs won't fully make up for the decline. The company is refinancing debt on concern that demand won't improve in 2013 because Congress may not act to avoid the so called fiscal cliff, in which USD 607 billion in automatic spending cuts and tax increases start in January 2013.

He added that "The financings here reflect management’s conservative macro view and the fiscal cliff worries. You've seen AK Steel and other companies look to rebalance the capital structures now because we could certainly be in a much worse economic environment next year."

Source - Bloomberg News

(www.steelguru.com)

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