THE parent company of SA’s largest steel maker, ArcelorMittal SA, took up the bulk of the shares in a rights offer in what one analyst said was a "disappointing" result.

The rights offer — which was valued at R4.5bn — closed on Friday, with a small amount of excess applications to soon be allocated.

The group’s parent, ArcelorMittal Holdings in Switzerland, is the holder of about R2.2bn of this stock. The South African subsidiary said on Monday that the parent would subscribe for about another R1.4bn rights offer shares, in terms of the underwriting agreement entered into with the company. Shares closed 9.68% higher at R5.89.

"This is a disappointing result inasmuch as only around 19% of the other pre-rights issue shareholders followed their rights, which means that the parent company ... had to take up the remaining 32% of the issue, which implies it now holds around 69% of the current shares issued," Stephen Meintjes, an analyst at Momentum SP Reid Securities said.

"It remains to be seen if the remaining (steel import) tariffs mentioned in the recent management update are implemented timeously by government. For global steel prices to recover, there still needs to be more elimination of uneconomic surplus capacity."

SA’s steel industry has applied for a broad range of tariff protections, but those approved so far are not seen to be enough to save it from a radical restructuring process.

ArcelorMittal SA said it was in a closed period and further information would be shared at the company’s year-end results on February 12.

After 18 months at the helm, CEO Paul O’Flaherty resigned last month, sending the share plummeting. The embattled firm has lobbied hard for support through tariffs on imported steel, especially from China.

Mr O’Flaherty would leave as CEO in the middle of next month and would be appointed a non-executive director from March "to retain his continued contribution, especially in respect of relationships with key stakeholders", the firm had said.

Mr O’Flaherty has warned of a "blood bath year" for the firm, indicating it needed antidumping duties of as much as 30%-60% on some Chinese steel products to sustain operations.

SA’s steel industry is in a terrible state. An audit letter from the South African Revenue Service has indicated that SA’s second-largest steel maker, Evraz Highveld Steel and Vanadium, owes tax worth R680m between 2007 and 2009.

This has complicated its potential sale to Hong Kong-based metals interests.

In April last year, Evraz Highveld applied for its JSE listing to be suspended as it could no longer continue as a going concern. Its creditors accepted a R350m offer by Hong Kong firm International Resources Project to acquire about R1.2bn of the company’s debt.