Corus to unveil rescue fund raising

City expects discounted rights issue for troubled Anglo-Dutch steel maker to fund restructuring plan

Corus, the embattled Anglo-Dutch steel maker, was poised last night to unveil a rescue rights issue which may raise as much as £450m. An announcement could come as early as today, say City sources.

According to yesterday's stock market speculation, the fund raising will see Corus launch a one-for-one rights issue priced at a heavily discounted 15p a share and underwritten by its stockbroker, Cazenove.

Sources close to the deal, however, suggested that the rights issue could be closer to 20p. Corus shares closed 1.75p higher at 26p yesterday.

One thing without doubt is that Corus desperately needs an injection of cash. It is heavily loss-making and is weighed down by a debt burden estimated to be in the region of £1.4bn. Philippe Varin, who was appointed as chief executive of Corus in May, has indicated the company will need at least £250m with which to fund his proposed restructuring programme.

Mr Varin, a man with 25 years of experience at the French aluminium producer Pechiney, has dubbed the turnaround plan Re-storing Success. His proposal is a two-phase plan. Phase one will see Corus focusing production on three sites: Rotherham, Scunthorpe and Port Talbot. Phase two will decide the future of the group's Teesside operations.

The company had hoped to raise a substantial amount of cash from disposals, but this largely seems to have failed. One strategy, which has been dropped by the company, envisaged the sale of the group's aluminium business. Such a deal would have raised as much as £600m for Corus but was stopped in its tracks by protests from Dutch workers.

Corus' last results statement, in September, certainly did not make pleasant reading for shareholders. The steel maker posted a pre-tax loss of £89m, although it did manage an 11 per cent rise in turnover to £4.2bn thanks to improvements in sales at both its aluminium and carbon steel divisions.

Analysts have argued for a long time that British Steel's merger with the Dutch-owned Hoogovens, which in 1999 created Corus, has been a disaster. The combined company has been loss-making since the tie-up and has made about 10,000 people redundant.

Meanwhile, speculators have had a bumpy ride betting on the group's share price. Earlier this year, Corus's share price collapsed to just 4p as the stock market started pricing in the possible bankruptcy of the company. Since that nadir, the stock has recovered strongly.

Its rise has been helped by the presence of the Russian businessman Alisher Usmanov on the group's shareholder register. He is currently Corus's third-biggest shareholder, with a 7 per cent stake held via a Cyprus-based company he controls. He is believed to have built up the bulk of his stake when Corus shares traded at below 10p and has said he would like to raise his holding to 10 per cent.

Mr Usmanov obviously believes that Corus is a good long-term investment and has even made suggestions as to how the company could cut some of its costs. The Russian businessman has argued that Corus would do well to buy cheap iron ore from the Russian iron ore producer Lebedinsky GOK, where he is also a major shareholder. This measure, he believes, would help Corus move back towards profitability. In a recent interview, Mr Varin indicated that he planned to meet Mr Usmanov to discuss the company's future.

Start your day with The Independent, sign up for daily news emails
Life and Style
Fans line up at the AVNs, straining to capture a photo of their favourite star
life Tim Walker asks how much longer it can flesh out an existence
Life and Style
Every minute of every day, Twitter is awash with anger as we seek to let these organisations know precisely what we think of them
techWhen it comes to vitriol, no one on attracts our ire more than big businesses offering bad service
Professor David Nutt wants to change the way gravely ill patients are treated in Britain
people Why does a former Government tsar believe that mind-altering drugs have a place on prescription?
Norway’s ‘The Nordland Line – Minute by Minute, Season by Season’ continues the trend of slow TV
Arts and Entertainment
Jonny Evans has pleaded not guilty to an FA charge for spitting at Papiss Cisse
Life and Style
Kate Moss will make a cameo appearance in David Walliams' The Boy in the Dress
The image released by the Salvation Army, using 'The Dress'
Liverpool defender Kolo Toure
football Defender could make history in the FA Cup, but African Cup of Nations win means he's already content
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

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

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Customer Relations Officer

£13000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Ashdown Group: Junior Application Support Analyst - Fluent German Speaker

£25000 - £30000 per annum + benefits: Ashdown Group: A global leader operating...

Jemma Gent: Project Coordinator

£12 - £15 Hourly Rate: Jemma Gent: In this role you will report to the Head of...

Recruitment Genius: Evening Administrator

£8 per hour: Recruitment Genius: This Pension Specialist was established early...

Day In a Page

Homeless Veterans campaign: Donations hit record-breaking £1m target after £300,000 gift from Lloyds Bank

Homeless Veterans campaign

Donations hit record-breaking £1m target after huge gift from Lloyds Bank
Flight MH370 a year on: Lost without a trace – but the search goes on

Lost without a trace

But, a year on, the search continues for Flight MH370
Germany's spymasters left red-faced after thieves break into brand new secret service HQ and steal taps

Germany's spy HQ springs a leak

Thieves break into new €1.5bn complex... to steal taps
International Women's Day 2015: Celebrating the whirlwind wit of Simone de Beauvoir

Whirlwind wit of Simone de Beauvoir

Simone de Beauvoir's seminal feminist polemic, 'The Second Sex', has been published in short-form for International Women's Day
Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Mark Zuckerberg’s hiring policy might suit him – but it wouldn’t work for me

Why would I want to employ someone I’d be happy to have as my boss, asks Simon Kelner
Confessions of a planespotter: With three Britons under arrest in the UAE, the perils have never been more apparent

Confessions of a planespotter

With three Britons under arrest in the UAE, the perils have never been more apparent. Sam Masters explains the appeal
Russia's gulag museum 'makes no mention' of Stalin's atrocities

Russia's gulag museum

Ministry of Culture-run site 'makes no mention' of Stalin's atrocities
The big fresh food con: Alarming truth behind the chocolate muffin that won't decay

The big fresh food con

Joanna Blythman reveals the alarming truth behind the chocolate muffin that won't decay
Virginia Ironside was my landlady: What is it like to live with an agony aunt on call 24/7?

Virginia Ironside was my landlady

Tim Willis reveals what it's like to live with an agony aunt on call 24/7
Paris Fashion Week 2015: The wit and wisdom of Manish Arora's exercise in high camp

Paris Fashion Week 2015

The wit and wisdom of Manish Arora's exercise in high camp
8 best workout DVDs

8 best workout DVDs

If your 'New Year new you' regime hasn’t lasted beyond February, why not try working out from home?
Paul Scholes column: I don't believe Jonny Evans was spitting at Papiss Cissé. It was a reflex. But what the Newcastle striker did next was horrible

Paul Scholes column

I don't believe Evans was spitting at Cissé. It was a reflex. But what the Newcastle striker did next was horrible
Miguel Layun interview: From the Azteca to Vicarage Road with a million followers

From the Azteca to Vicarage Road with a million followers

Miguel Layun is a star in Mexico where he was criticised for leaving to join Watford. But he says he sees the bigger picture
Frank Warren column: Amir Khan ready to meet winner of Floyd Mayweather v Manny Pacquiao

Khan ready to meet winner of Mayweather v Pacquiao

The Bolton fighter is unlikely to take on Kell Brook with two superstar opponents on the horizon, says Frank Warren
War with Isis: Iraq's government fights to win back Tikrit from militants - but then what?

Baghdad fights to win back Tikrit from Isis – but then what?

Patrick Cockburn reports from Kirkuk on a conflict which sectarianism has made intractable