Steel and mining company ArcelorMittal has signed a share purchase agreement for the sale of a 50% stake in Global Chartering Limited (GCL), its drybulk shipping business, to DryLog, part of Greece-based Ceres Shipping.
As informed, ArcelorMittal will subsequently form a 50:50 shipping joint venture with DryLog.
The transaction, which is expected to close before the end of 2019, is part of ArcelorMittal’s commitment to unlock up to USD 2 billion of value from its asset portfolio by mid-2021 to reduce debt.
GCL currently operates 28 dry cargo vessels, which range from Supramax to Capesize, 25 of which are on long-term leases and will be transferred into the joint venture, with the remaining three being owned outright.
The joint venture is expected to benefit from the combination of the two businesses’ respective knowledge and expertise, and ArcelorMittal’s annual cargo commitments, a portion of which will be handled exclusively by the JV. It will also benefit from DryLog’s ability to optimize transport solutions and its technical and commercial vessel management expertise.
“These factors will enable the joint venture to grow its operations and become a significant player in the international shipping industry,” ArcelorMittal said in a statement.
The stake sale and JV formation will ultimately impact ArcelorMittal’s net debt by USD 530 million, with USD 400 million on completion and a further USD 130 million due in early 2020, according to the company.