Cleary Gottlieb Steen & Hamilton has advised ArcelorMittal on a $2 billion issue of shares and convertible debt—part of a strategy to reduce net debt and enhance liquidity for the post-COVID 19 period, according to a lawyer involved.

Luxembourg-based ArcelorMittal, the world's largest steel producer by revenue, said the financing would help with "building additional resilience going forward in what remains an uncertain environment," according to a statement on its website.

The deal is comprised of a $750 million share issue and a $1.25 billion issue of mandatorily convertible notes, or bonds redeemable in shares, according to a statement from Cleary.

Proceeds from the deal will be used to deleverage and enhance liquidity by replacing shorter-term debt with equity and longer-term debt, said John Brinitzer, a capital markets partner at Cleary in Paris who advises ArcelorMittal.

"We hear from bankers that there will be more such deals coming forward," Brinitzer said.

"Many companies are increasing their liquidity lines during this period," he added. "There are companies who really need the financing and others who are looking at this as a time to tap the equity markets while conditions are advantageous."

ArcelorMittal falls into the latter category, Brinitzer said. "The company has been deleveraging for several years, and its liquidity position is good," he said. "With this deal, they are getting ahead of the curve by accessing the equity and equity-linked markets at an opportune time."

ArcelorMittal shares trade on the New York Stock Exchange, where the benchmark S&P 500 index is down 13% from mid-February, before the COVID-19 crisis erupted in the United States, according to MarketWatch.

The shares also trade in Paris, Madrid, Amsterdam and Luxembourg, where benchmark indexes are down 27%, 34%, 17% and 19%, respectively, since mid-February, according to MarketWatch.

The deal was conducted entirely during the recent COVID-19 restrictions. The operations were initiated and their prices fixed on May 11, according to a statement from Cleary. The share issue closed on May 14 and the note issue closed on May 18, the Cleary statement said.

In addition to Brinitzer, the Cleary team included senior attorney Monica Kays in Paris, senior attorneys David Parish and Elizabeth Chang in New York, and counsel Géraldine Bourguignon in Brussels. Gamal Abouali, an M&A and capital markets partner in Abu Dhabi, advised the Mittal family, who own 36% of ArcelorMittal shares, on their participation in the deal.

ArcelorMittal was advised in Luxembourg by partners Philippe Hoss and Thierry Kauffman at Elvinger Hoss Prussen.

Shearman & Sterling advised the 13-bank syndicate that underwrote the deal, led by BNP Paribas, Crédit Agricole Corporate and Investment Bank, Goldman Sachs & Co. LLC, J.P. Morgan and Société Générale. The Shearman team included capital markets partners David Dixter and Marwa Elborai in London, tax partner Kristen Garry in Washington, financial markets partner Jennifer D. Morton in New York, and environmental counsel Mehran Massih in London and New York.

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