BlueScope Steel (BSL)

By Jason Fittler

BSL has struggled to compete with overseas steel manufacturing companies. 

They have recently been looking to raise equity to reduce the overall debt burden of the company. 

This week the retail end of the right issue closed, the company was looking to raise $600 million through a right issue. The rights issue was in two parts, first to institutional investors and the second to the retail investors. The rights were offered at a discount to the then market price.  

The take-up on by retail investors fell short with about only 48% of share holders taking up the rights. Given that the price of the stock fell back to the rights price as soon as the rights issued was announced it is no wonder that the retails investor avoided the offer.  

The institutional offer was completed late last month, with 87% take-up by eligible shareholders to raise gross proceeds of $338m. The retail offer had sought to raise a further $262m. 

Credit Suisse as underwriter will now look to offer the remaining new shares to their investors. The company in August launched a major restructuring effort to improve profitability; including shutting down a blast furnace and mill and exiting its Australian export business. 

Earlier this month, it said it would apply for a $100m advance from the government under a scheme to provide industry assistance to address higher input costs and the strong Australian dollar.  

We continue to avoid this stock; there are plenty of better investments in the markets at present. 

BSL is now for the speculators. 

For more information on BlueScope Steel (BSL) please contact us on 07 4771 4577.