HARTFORD, Conn. (AP) ¿ Shares of Steel Dynamics Inc. fell sharply Wednesday, a day after the steel producer cut its dividend by 25 percent and announced it will sell 27 million shares.
The Fort Wayne, Ind., company cut its quarterly dividend to 7.5 cents per share from 10 cents per share, payable July 10 to shareholders of record as of June 30.
Steel Dynamics also said Tuesday it will offer a $150 million aggregate principal amount of convertible senior notes due 2014.
Citi Investment Research analyst Brian Yu gave a mixed review of Steel Dynamics' stock sale.The transaction is a "net-positive" for the company because its debt has "been an ongoing overhang," he said in a note to investors. "That said, we previously thought STLD would renegotiate covenants and repay over time since swapping debt for equity is not ideal, but the proposed transactions do provide STLD with greater balance sheet flexibility," Yu said, referring to Steel Dynamics with its stock symbol STLD. The estimated proceeds of $533 million from the stock and debt offerings will be used to repay a term loan balance of $488 million as of the first quarter of 2009, he said. He left unchanged his 2009 earnings estimate of 15 cents per share. Analysts surveyed by Thomson Reuters expect Steel Dynamics to post a loss of 10 cents per share this year. Shares fell $1.54, or 9.9 percent, to $14.05 in morning trading.