ArcelorMittal begins Ilva deconsolidation after government takes stake

ArcelorMittal has received €400 million ($478m) of new equity from Invitalia, the state company that is investing in the Italian steelmaker formerly known as Ilva. ArcelorMittal’s Italian subsidiary, AM investCo, has therefore given Invitalia a 38% shareholding and joint control over the company.

AM InvestCo, now co-owner of the former Ilva, is being re-named Acciaierie d’Italia Holding, and its main operating subsidiary ArcelorMittal Italia will be renamed Acciaierie d’Italia, the company says in a note sent to Kallanish.

Acciaierie d’Italia Holding will become an independent entity without financial reliance on ArcelorMittal, which will now “deconsolidate the assets and liabilities (including the remaining lease and purchase liability) of Acciaierie d’Italia Holding (formerly AM InvestCo Italy) from its consolidated statement of financial position and will account its interest in the company under the equity method”, the note explains.

The €400m investment from Italian authorities has been the object of a dispute between the two companies due to Invitalia’s failure to meet the payment deadline. ArcelorMittal signed last year a binding agreement with Invitalia to form a 50-50 public-private partnership to operate the Taranto steelworks. At the time, Invitalia agreed to invest in ArcelorMittal’s Taranto operating subsidiary, AM InvestCo, in two tranches. The first investment of €400m was to be made by 5 February 2021.

Now that the Italian government has made the first payment, the 50-50 public-private partnership has become official, Kallanish notes.

A €680m second equity payment by Invitalia is scheduled for May 2022. However, if certain conditions are not respected, the capital invested in Ilva by Acciaierie d’Italia Holding, or ArcelorMittal, will be returned and the company “will not be required to complete the purchase”, ArcelorMittal reveals.

The conditions in question involve “the amendment of the existing environmental plan to account for changes in the new industrial plan; the lifting of all criminal seizures on the Taranto plant; and the absence of restrictive measures – in the context of criminal proceedings where Ilva is a defendant – being imposed against Acciaierie d’Italia Holding or its subsidiaries,” ArcelorMittal explains.

If all conditions are fulfilled, in May 2022 Invitalia’s shareholding in Acciaierie d’Italia will increase to 60%, and ArcelorMittal will invest up to €70m to keep a 40% shareholding.

Natalia Capra France