AK Steel hits 8-year low as metal prices decline
AK Steel Holding Corp., a supplier of the metal to U.S. builders and automakers, forecast lower prices and a wider-than-estimated loss while announcing the sale of equity and debt to repay a credit facility.
The fourth-quarter loss excluding a tax expense will be 34 cents to 39 cents a share, West Chester, Ohio-based AK said on Tuesday. That trailed the 21-cent average of 17 analysts' estimates compiled by Bloomberg. AK said separately it will offer $350 million of secured notes, as much as $143.8 million of exchangeable notes and sell as many as 28.8 million shares to repay the facility and for general corporate purposes.
AK dropped 18 percent to $4.50, the biggest decline since Nov. 20, 2008, and the lowest closing price since June 2004. The shares have tumbled 46 percent this year. The company operates a plant in Butler.
Average steel selling prices will be down 5 percent compared with the third quarter, in part because of worsening global business conditions, and lower raw-material costs won't fully make up for the decline, AK said. The company is refinancing debt on concern that demand won't improve in 2013 because Congress may not act to avoid the so-called fiscal cliff, in which $607 billion in automatic spending cuts and tax increases start in January, said Kuni Chen, an analyst at CRT Capital Group.
“The financings here reflect management's conservative macro view and the fiscal cliff worries,” said Chen, who's based in Stamford, Conn. “You've seen AK Steel and other companies ... look to rebalance the capital structures now because we could certainly be in a much worse economic environment next year.”
The fourth-quarter net loss will be 67 cents to 72 cents a share, AK said. Steel shipments are forecast at about 1.37 million to 1.4 million tons, compared with 1.36 million tons in the third quarter.
Standard & Poor's downgraded AK's credit rating to B, five levels below investment grade, from B+. Moody's Investors Service downgraded the company an equivalent step, to B2 from B1.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Steelers notebook: Tomlin ends practice with third-down work
- Steelers’ Harrison eyes stretch run
- Penguins co-owner Lemieux snuffs rumored rift with Crosby
- Emotional send-off awaits Pitt seniors
- Warrants issued for women accused of prostitution in New Stanton sting
- Starkey: Artie Rowell’s incredible odyssey
- Pirates sign free agent 1B-OF Goebbert, RHP Webster
- Steelers notebook: Tomlin not grooming successor to RB Williams
- NFL notebook: Gifford had CTE, family says
- Pizza delivery woman robbed in Greensburg
- House fire displaces family of 6 in Somerset County