The proposed share issue will be underwritten by a group of banks that have agreed to underwrite 960 million shares at a minimum issue price of CHF 3.40 ($2.28) per share. The Board of Directors of ABB is seeking shareholder approval to issue up to 1.2 billion new ABB shares.
In addition, ABB has signed a preliminary agreement to sell most of its upstream business in the Oil, Gas and Petrochemicals division to a consortium consisting of Candover Partners, JP Morgan, and 3i Group for $925-975 million. It is expected that the definitive agreement will be signed before the end of 2003.
News of the restructuring programme was generally well received by the markets. ABB shares rose on stock markets by over 4% on the news.
ABB reported a third quarter net loss of $279 million, up from a loss of $148 million in the same period in 2002. However, the group said that its underlying operations were continuing to improve, with earnings before interest for the Power Division rose by 16% over this period, and by 28% for the Automation Division. ABB said that its Power Division had done well in China and the Middle East, although orders in North America remained "at a low level". ABB said that recent power failures in North America would mean heavy spending there on new equipment. Orders for the Power Division rose by 21% for the quarter.
ABB said that it was confident that the US courts would throw out appeals against a settlement of long-running asbestos-related claims.
ABB's debt is currently $8.3 billion. With the revenues from the sale of the oil and gas upstream business not expected to be available in the current year, ABB is predicting year-end debt to be about $7.3 billion, rather than its original estimate of $6.5 billion.
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