Steel maker after $790m

BlueScope Steel will raise A$600 million ($790 million) from shareholders to repay part of its A$1.6 billion in net debt and strengthen its financial position.

The embattled steel maker is trying to turn itself around after posting a A$1 billion loss and sacking more than 1000 workers in the past financial year.

Chief executive Paul O'Malley said earnings continued to be hit by the high Australian dollar, low steel prices, high raw material costs and softer demand.

"The entitlement offer will result in a more appropriate capital structure for the company," he said. "Following the entitlement offer we will remain focused on further reducing the company's debt levels over time."

BlueScope said its net debt had increased to A$1.5 billion by October 31, up from A$1.068 billion at June 30 because of restructure, working capital and capital expenditure costs. Shareholders registered a large protest vote at its annual meeting last week, after A$3 million in executive bonuses were awarded.

Australia's second-biggest steel maker, OneSteel, is also struggling. It is reviewing its Australian steel business and undertaking a labour and cost reduction programme, following a disappointing performance. However, it also owns more profitable iron ore assets in South Australia.

BlueScope said the money would be raised in a fully underwritten accelerated renounceable entitlement offer at an offer price of A40cps.

Shares in the company closed at A61c on Monday before going into a trading halt on Tuesday. Eligible BlueScope shareholders will be able to buy four new shares for every five shares already held.

BlueScope said there would be an institutional and retail investor component of the offer.

- AAP