Author: Gordon Platt

Russian steelmaker Severstal, jilted in its white-knight approach to save Arcelor from a hostile takeover by Mittal Steel, is planning to list on the London Stock Exchange to raise capital to play a major role in the ongoing consolidation of the global steel industry.

Severstal announced its intention to proceed with a global offering and London listing of global depositary receipts before the end of 2006. Citigroup, Deutsche Bank and UBS were selected to be the lead managers of the issue, which is expected to raise about $1.5 billion and would value the group at about $12 billion. The company’s ordinary shares are already listed on the RTS and Micex stock exchanges in Moscow.

Russian oligarch Alexei Mordashov owns 90% of Severstal through several entities. He intends to sell part of his holdings in connection with the global offering. Severstal owns the former Rouge Steel in Dearborn, Michigan. In September Severstal announced an increase in its equity stake in Italy-based Lucchini to 70.8% by consolidating its own holdings with those of another company controlled by Mordashov.

Severstal said it plans to put in place new corporate governance arrangements commensurate with its international status. It said it would appoint an independent non-executive chairman and a board, half of which will be composed of independent non-executive directors. The company focuses on high-quality flat steel products in Russia and the United States, particularly in the automotive industry, as well as niche markets in Russia for large-diameter pipes and specialty products in Europe.

Gordon Platt