Newsflow on divestments, loan facilities and Terni expected

Steelmaker Outokumpu (OMX:OUT1V) was heavily loss making on Q1 2013 but that wasn’t a surprise to anyone. Synergy savings are on track and further cost cuts are coming ferrochrome expansion was touted as going very well. Calmert investment related purchases affected operating cash flow negatively, turning it slightly to the red overall. Net result was around -150 million with operating result narrowly positive.

Second quarter 2013 underlying result is expected on par or slightly weaker than Q1 as the company says the European market is softer than on Q1 at the moment. There will likely be one-off items related to cost cutting programme as well. From second half more benefits are expected to be realized while demand visibility is low as usual.

Terni deadline has been extended for a certain period of time with Outokumpu extremely tight-lipped not to reveal any more details. Regulatory issues should be once more behind this and if I were to speculate, such issues could be potential competition authorities concerns with Aperam (LuxSE: APAM) and or aversion on accepting bids from outside of the Euro area.

The debt situation of the company has been worrying investors. There is still some room with e covenants at 115% and ThyssenKrupp (FWB: TKA, LSE: THK) debt also counted in the current numbers despite not actually affecting that. The company is negotiating two loan facilities, with news on another expected by the end of June. It sounds like some divestment may be close by too as the management seemed to downplay any imminent rights issue.