Steelmaker's new shares issue

The firm is in the middle of a major UK restructuring programme

Anglo-Dutch steelmaker Corus is to raise £307m ($513m) by issuing 1.304 billion new ordinary shares at 23.5 pence each.

Europe's third-largest steel maker, said it would offer five new shares for 12 existing shares.

It is a "major step forward in our plan to restore the competitiveness of our carbon steel business", Corus said.

The firm, which intends to cut 1,150 UK jobs, said the equity issue would also strengthen its balance sheet, and provide financial flexibility.

'Attractive returns'

Corus, which is in the middle of a UK restructuring, said it was "cautiously positive" on the market outlook for 2004.

Chief executive Philippe Varin said: "The UK restructuring plans should provide attractive returns.

"Our Restoring Success initiatives, which include these plans, have the objective of returning Corus to a competitive position amongst its peer group over the medium term."

The total restructuring plans for the UK will cost up to £250m, and should see profit improvements of up to £120m by the end of 2006, Corus said.

Corus said it is trading in line with its expectations, with positive and negative factors continue broadly to offset each other.

Weak European demand

It expects to benefit from improvements in manufacturing, ongoing efficiency programmes and the delayed effects of the strength of the euro against the pound in the first half of 2003.

This will be offset by higher raw material costs, freight input prices, maintenance-related outages and the effect of a fire at the group's Scunthorpe works.

In September the company said a recovery in steel prices and volumes had helped it trim losses in the first six months of the year to £36m, against £252m a year earlier.

The group said global steel demand was being driven by China but underlying European demand remains weak.

Earlier this week it said it may see exports to the US have dropped in 2003, because of the effect of American tariffs on imported steel.

Shares in Corus closed up 6p, or 23%, at 32p on the London Stock Exchange.