Arrium raising not a clarion call

Arrium has become the first of the iron ore miners to raise equity in response to falling prices. The company announced it would tap shareholders for $750m to pay off debt, more than doubling its share count and devastating per share profits. Shareholders will no doubt be cross and some may suggest it was unnecessary. Indeed, on first glance, Arrium doesn’t appear particularly distressed. Net debt of just under $2bn is enormous next to a market capitalisation of under $900m but operating cash flow covers the interest bill more than 5 times and the company holds assets with a book...

Arrium has become the first of the iron ore miners to raise equity in response to falling prices. The company announced it would tap shareholders for $750m to pay off debt, more than doubling its share count and devastating per share profits.

Shareholders will no doubt be cross and some may suggest it was unnecessary. Indeed, on first glance, Arrium doesn’t appear particularly distressed.

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