Steel pipes maker Vallourec raises €1bn from BPI et al.

Alice Tchernookova
11 May 2016

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Vallourec has successfully completed a rights issue and convertible bond sale, launched in April 2016, raising around €1bn from BPI France and other investors.

Convertible bonds were issued by BPI France and Nippon Steel & Sumitomo Metal Corp (NSSMC) exclusively. BPI also subscribed to the rights issue. The total value of its subscription amounted to €219m.

The convertible bonds issued by BPI were reimbursed on 3 May and converted into Vallourec shares after reaching a consensus with the company's Brazilian unit. As a result, BPI France now holds 17.4% of the company's capital, which will reduce to 15% once NSSMC's bonds have been converted too.

Together, BPI and NSSMC have contributed more than half of the €1bn round. The rights issue represents about €480m, and the convertible bond sale €514m. The funds will be used as part of restructuring plans announced by the company back in February.

The company is also looking to increase its presence in Asia, thereby reducing costs in Europe, and to merge its Brazilian unit with another one in a joint venture with NSSMC.

Previous funding
BPI France has been a shareholder in the company since 2009. Before the transaction, it held 10.3% of the company's capital and 13.9% of the voting rights.

In April 2016, the struggling company announced a capital increase of €1bn, launching a rights issue and convertible bond sale.

The company had lost 75% of its market value in the previous year, mostly due to the fall in crude prices that began in mid-2014, according to the Financial Times.

Company
Vallourec is a producer of hot-rolled steel tubes and pipes, primarily serving the energy markets and oil & gas companies. Its services also extend to industries such as mechanicals, automobiles, construction and others.

It makes steel bearings, blind-end cylinders and drill pipes, among other products. Formerly known as Vallourec & Mannesmann Tubes, it was founded in 1997 and is based in Boulogne-Billancourt.

It currently employs 20,000 people and is present in 20 countries across the EU, the US, Asia and South America.

People
BPI France – Bertrand Finet (investment executive director, mid-to-large cap).