ArcelorMittal threatened by loan terms

ArcelorMittal, the world's biggest steelmaker, will probably seek to renegotiate terms on 27.5 billion euros ($36 billion) of loans after cutting production by almost half amid collapsing demand.

The Luxembourg-based company, which will likely report a second consecutive quarterly net loss today, has to boost earnings over the rest of the year to avoid a breach of debt covenants, said Jonathan Pitkanen, a bond analyst at Aviva Plc. Steel demand must recover to avoid such an outcome, said Ingo Schmidt, an analyst at Hamburger Sparkasse in Hamburg.

ArcelorMittal, which was formed through the takeover of Arcelor SA by Mittal Steel Co in 2006, has cut output as much as 45 percent in an effort to balance supply with demand. Prices plunged to a six-year low on dwindling orders from automakers and builders. Global demand will drop 15 percent in 2009, the World Steel Association said yesterday.