Steel firm Outokumpu should help itself: Finland’s state fund – by Jussi Rosendahl (Reuters U.S. – September 30, 2013)

HELSINKI – (Reuters) – Steel company Outokumpu (OUT1V.HE) should try to solve its own problems even though its heavy debts have raised the prospect it might need more money from shareholders at some stage, the head of Finland’s state investment fund Solidium said.

While Finland is often listed among the most innovative economies and remains triple-A rated, government funding is still badly needed in the country of 5.4 million people which has a limited pool of private capital. Kari Jarvinen, Solidium’s managing director, told the Reuters Nordic Investment Summit that the fund was making its long-term investment decisions independent of political pressure to help out troubled Finnish companies.

“It is better that the company tries to sort out its problems by itself. The company already had a 1 billion (euros) rights issue only one-and-a-half years ago,” Jarvinen said when asked about Outokumpu’s finances. “It is paramount that these companies find ways to be profitable in the future.”

Solidium holds stakes worth in total 7.7 billion euros in 11 Finnish listed companies including paper maker Stora Enso (STERV.HE) and investment and insurance group Sampo (SAMAS.HE).

Founded in 2009, its mandate is to invest government money in businesses deemed to be of national importance, while avoiding political interference.

Solidium invested 314 million euros ($425 million) in Outokumpu’s share issue last year when the company needed money to buy ThyssenKrupp’s (TKAG.DE) stainless steel unit Inoxum. Solidium is now Outokumpu’s second-biggest shareholder with a stake of around 22 percent.

But Outokumpu might need more cash. The company, like other steelmakers in Europe, has faced weak demand as a result of customers holding back from purchases because of falling steel prices. At the end of the second quarter, Outokumpu’s debt-to-equity ratio was almost 121 percent, compared with 103 percent at the end of March.

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