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Report: Saudi sovereign fund looking to invest up to US$300M in ArcelorMittal JV

Saudi Arabia's Public Investment Fund is considering injecting up to US$300 million into ArcelorMittal's ArcelorMittal Tubular Products Jubail joint venture, Bloomberg News reported July 4, citing sources.

The investment, by way of a debt-for-equity swap, will see the sovereign fund's stake in the plant doubling to 40%, the sources added. The transaction will not affect ArcelorMittal's 40.8% stake in the joint venture.

The final terms of the deal have not been agreed and the plans could change, the people said.

ArcelorMittal established the Jubail greenfield joint venture project with Al-Tanmiah Co. in 2007. However, the financial crisis, the Great Recession and the oil price collapse in late 2014, had put pressure on the project.

In its 2017 annual report, ArcelorMittal said Jubail's financial situation has been affected by "a slower than expected ramp-up of operations and may require further funding."

ArcelorMittal wrote the value of its equity investment down to zero in 2016. The steelmaker also partially wrote down further investments made in the form of shareholder loans to the joint venture, and at least some of those loans due for repayment this year, according to the company's financial statements.

The Saudi fund intends to use the facility to build the country's position as a pipe supplier for the energy sector, as it works to diversify into non-oil industries. The fund holds assets worth about US$150 billion in listed Saudi companies.

ArcelorMittal and the Saudi fund declined to comment, while Al-Tanmiah and its parent group Bin Jarallah Holding did not respond to the newswire's requests for comment.