Statement re Acciaierie d’Italia being placed into extraordinary administration
- None.
- ADI placed under extraordinary administration by the Italian Government, transferring control from ArcelorMittal to government-appointed commissioners
- Discussions between ArcelorMittal and Invitalia to address capital investment discrepancies were unsuccessful
- ADI's financial situation impacted by delayed support measures, challenges during the Covid and energy crises, and unresolved lease conditions
Insights
The government's intervention in Acciaierie d’Italia SpA (ADI) has immediate implications for the company's capital structure and financing strategy. The shift from a public-private partnership to full government control suggests a significant realignment of interests and priorities. Stakeholders should monitor the impact on ADI's market competitiveness, as government administration may alter operational efficiencies and investment strategies. Additionally, the failure to access traditional debt financing indicates potential liquidity constraints, which could affect ADI's ability to meet its ongoing financial obligations and fund operations.
The extraordinary administration indicates a protective legal framework has been activated, which is commonly used in Italy to restructure companies in distress. For ArcelorMittal, the cessation of involvement raises questions about the recoverability of their €2 billion investment and the contractual implications of the unmet conditions precedent related to the asset purchase. The legal intricacies of this transition, including the temporary removal of criminal immunity, will likely have a complex impact on the negotiations and future litigation risks.
The broader steel industry is affected by such government interventions, as they can disrupt market dynamics and competitive balance. ADI's situation underscores the challenges faced by the sector, including environmental compliance costs and the recent energy crisis. The market will be observing how ADI's restructuring under government control might influence regional steel production, pricing and supply chain stability. This development could potentially signal a shift in the government's approach to managing industrial assets, with repercussions for other companies in similar situations.
20 February 2024, 17:30 CET
Earlier today the Italian Government announced that it has placed Acciaierie d’Italia SpA (‘ADI’) into extraordinary administration subsequent to the request of Invitalia, thereby passing control of the company from its current shareholders, ArcelorMittal and Invitalia, to government appointed commissioners.
This ends ArcelorMittal’s involvement in ADI, which started in 2018. Since that time, ArcelorMittal has been fully committed to the people and assets of ADI - then known as Ilva - investing over
ArcelorMittal had been keen to address the significant discrepancy in capital investment into ADI by the two shareholders. In recent discussions ArcelorMittal put forward pragmatic proposals to address this while continuing the public-private partnership with Invitalia that was established in April 2021. When we were not able to agree on acceptable terms, we also offered to sell our shareholding in ADI to Invitalia. The discussions, despite ArcelorMittal’s best efforts, were not successful.
Had ADI been able after April 2021 to access traditional debt financing and been able to raise the working capital required to fund its ongoing needs, rather than relying on equity injections from its shareholders as its sole source of capital, this situation could have been avoided. Unfortunately, the conditions precedent to allow ADI to convert its lease of the assets into a formal purchase – conditions that ADI has no control over, were originally set to be completed before May 2022, and subsequently extended to May 2024 - remain unmet today. ADI’s financial situation has been further impacted by the Italian Government delivering less than one-third of the
An already complicated turnaround was made even more challenging by the instability caused by the temporary removal of criminal immunity applicable during the implementation period of the environmental investment programme, the demand environment during the Covid crisis and the energy crisis in Europe last year.
For the people and communities of ADI, ArcelorMittal hopes that a future can be secured that will bring much needed stability.
ENDS
About ArcelorMittal
ArcelorMittal is the world's leading steel company, with a presence in 60 countries and primary steelmaking facilities in 15 countries. In 2022, ArcelorMittal had revenues of
Our purpose is to produce ever smarter steels that have a positive benefit for people and planet. Steels made using innovative processes which use less energy, emit significantly less carbon and reduce costs. Steels that are cleaner, stronger and reusable. Steels for electric vehicles and renewable energy infrastructure that will support societies as they transform through this century. With steel at our core, our inventive people and an entrepreneurial culture at heart, we will support the world in making that change. This is what we believe it takes to be the steel company of the future.
ArcelorMittal is listed on the stock exchanges of New York (MT), Amsterdam (MT), Paris (MT), Luxembourg (MT) and on the Spanish stock exchanges of Barcelona, Bilbao, Madrid and Valencia (MTS).
For more information about ArcelorMittal please visit: http://corporate.arcelormittal.com/
| Contact information ArcelorMittal Investor Relations | |
| General | +44 20 7543 1128 |
| Retail | +44 20 3214 2893 |
| SRI | +44 20 3214 2801 |
| Bonds/Credit | +33 171 921 026 investor.relations@arcelormittal.com |
| Contact information ArcelorMittal Corporate Communications | |
| Paul Weigh Tel: E-mail: Italy - Ad Hoc Communications Marina Beccantini Giorgio Zambeletti | +44 20 3214 2419 press@arcelormittal.com +39 335 1415588 +39 335 5347916 |
FAQ
What is the latest update on Acciaierie d’Italia SpA (ADI) as per the Italian Government's announcement?
How much did ArcelorMittal invest in ADI and what initiatives were completed?
Why were discussions between ArcelorMittal and Invitalia regarding capital investment discrepancies unsuccessful?
What impacted ADI's financial situation according to the press release?
