Corus raises £300m and steels UK workforce for more job cuts

Corus, the Anglo-Dutch steelmaker, set the scene for more job cuts yesterday as it launched a £307m share issue to pay for the restructuring of its loss-making UK steels business.

The share offer, a hybrid between a placing and a rights issue, could also pave the way for Corus to resurrect the sale of its aluminium business which was blocked earlier this year by its Dutch supervisory board.

The proceeds from the share offer will be used to fund the £250m rationalisation of Corus's UK operations from five down to three plants and cut steel production from 12 to 10 million tonnes.

The restructuring will lead to 1,150 job losses and save Corus £120m. In addition, the company announced it was seeking a further £350m of cost reductions through the rationalisation of white-collar departments such as finance, IT and personnel and through savings in manufacturing and supplies. Corus also warned that its Teesside plant could close in two years unless it found a joint venture partner for the plant.

Philippe Varin, who took over as its chief executive in May, refused to comment on the level of potential job reductions but other Corus executives pointed out that the company lost about 1,500 staff a year anyway through natural wastage.

The new cost-saving initiatives are part of an ambitious plan to improve Corus's performance by £680m over the next three years and close the "competitive gap" with rival steelmakers.

Corus has announced 10,000 job cuts since 2001 and when the latest UK restructuring is complete in a year's time, the workforce will have fallen to about 48,000.

Under the terms of the share offer, Corus is raising £291m net of expenses by issuing 1.3 billion new shares - five for every 12 in issue - at a price of 23.5p, a 10 per cent discount to Tuesday's closing price.

Corus's joint brokers Lazard and Cazenove had provisionally placed all 1.3 billion shares by 9am yesterday but existing shareholders will be able to claw back those shares in proportion to their current holdings, which makes the offer akin to a rights issue.

Corus shares rose 23 per cent, ending 6p up at a two-month high of 32p.

It was the refusal of the Dutch arm of Corus to sanction the £543m sale of the aluminium division to Pechiney earlier this year which precipitated the group's financial crisis. But yesterday Leo Berndsen, the chairman of the supervisory board of Corus Nederland, said it was "willing to enter into a constructive and open-minded dialogue with the group as to the future of its remaining aluminium activities at the appropriate time".

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee