OFFERING CIRCULAR ARCELORMITTAL (a société anonyme incorporated under the laws of the Grand Duchy of Luxembourg having its registered office at 19, avenue de la Liberté, L-2930 Luxembourg, Grand Duchy of Luxembourg, and registered with the Registre de Commerce et des Sociétés, Luxembourg under number B82.454) U.S.$650,000,000 Subordinated Perpetual Capital Securities Issue price: 100 per cent. The U.S.$650,000,000 Subordinated Perpetual Capital Securities (the Securities) are issued by ArcelorMittal (the Issuer). Application has been made to the Commission de Surveillance du Secteur Financier (the CSSF) in its capacity as competent authority under the Luxembourg Act dated 10 July 2005 on prospectuses for securities as amended by the Luxembourg law dated 3 July 2012 (the Prospectus Act) to approve this document as a prospectus and to the Luxembourg Stock Exchange for the listing of the Securities on the Official List of the Luxembourg Stock Exchange and admission to trading on the Luxembourg Stock Exchange's regulated market with effect from the Issue Date (as defined herein). The CSSF assumes no responsibility for the economic and financial soundness of the transactions contemplated by this Offering Circular or the quality or solvency of the Issuer in accordance with Article 7(7) of the Prospectus Act. The Luxembourg Stock Exchange's regulated market is a regulated market for the purposes of the Directive 2004/39/EC on Markets in Financial Instruments (MiFID). The Securities are expected to be rated Ba2 by Moody's Investors Service Ltd., B+ by Standard & Poor's Credit Market Services France SAS and BB by Fitch Ratings Ltd. (see "Overview" below for information in relation to Regulation (EC) No. 1060/2009 (as amended)). A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. The Securities will initially be represented by a temporary global security (the Temporary Global Security), without interest coupons, which will be deposited on or about 28 September 2012 (the Closing Date) with a common depositary for Euroclear Bank SA/NV (Euroclear) and Clearstream Banking, société anonyme (Clearstream, Luxembourg). Interests in the Temporary Global Security will be exchangeable for interests in a permanent global security (the Permanent Global Security and, together with the Temporary Global Security, the Global Securities), without interest coupons, on or after 7 November 2012, upon certification as to non-u.s. beneficial ownership. Interests in the Permanent Global Security will be exchangeable for definitive Securities only in certain limited circumstances - see "Overview of Provisions relating to the Securities while Represented by the Global Securities". An investment in the Securities involves certain risks. Prospective investors should have regard to the factors described under the heading "Risk Factors" on page 13. Joint Bookrunners and Joint Structuring Advisers Citigroup HSBC Joint Bookrunners BNP PARIBAS The Royal Bank of Scotland The date of this Offering Circular is 27 September 2012.
This Offering Circular comprises a prospectus for the purposes of Article 5.4 of Directive 2003/71/EC as amended (the Prospectus Directive). ArcelorMittal (the Issuer and the Responsible Person) accepts responsibility for the information contained in this Offering Circular. To the best of the knowledge of the Responsible Person (who has taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts and does not omit anything likely to affect the import of such information. This Offering Circular is to be read in conjunction with all information which is deemed to be incorporated herein by reference (see "Information Incorporated by Reference"). This Offering Circular should be read and construed on the basis that such information is incorporated in and shall and form part of this Offering Circular. BNP Paribas, Citibank International plc, HSBC Bank plc and The Royal Bank of Scotland plc (the Managers) have not independently verified the information contained herein. Neither the Managers nor any other person mentioned in this Offering Circular, except for the Issuer, is responsible for the information contained in this Offering Circular or any other information incorporated herein by reference. Accordingly, no representation, warranty or undertaking, express or implied, is made and no responsibility or liability is accepted by the Managers as to the accuracy or completeness of the information contained or incorporated in this Offering Circular or any other information provided by the Issuer in connection with the offering of the Securities or their distribution. No person is or has been authorised by the Issuer to give any information or to make any representation concerning the Issuer or the Securities not contained in or incorporated by reference in this Offering Circular and, if given or made, such information or representation must not be relied upon as having been authorised by the Issuer or any of the Managers. Neither this Offering Circular nor any other information supplied in connection with the offering of the Securities (a) is intended to provide the basis of any credit or other evaluation or (b) should be considered as a recommendation by the Issuer or any of the Managers that any recipient of this Offering Circular or any other information supplied in connection with the offering of the Securities should purchase any Securities. Each investor contemplating purchasing any Securities should make its own independent investigation of the financial condition and affairs, and its own appraisal of the creditworthiness, of the Issuer. Neither this Offering Circular nor any other information supplied in connection with the offering of the Securities constitutes an offer or invitation by or on behalf of the Issuer or any of the Managers to any person to subscribe for or to purchase any Securities. Neither the delivery of this Offering Circular nor the offering, sale or delivery of the Securities shall in any circumstances imply that the information contained herein concerning the Issuer is correct at any time subsequent to the date hereof or that any other information supplied in connection with the offering of the Securities is correct as of any time subsequent to the date indicated in the document containing the same. The Managers expressly do not undertake to review the financial condition or affairs of the Issuer during the life of the Securities or to advise any investor in the Securities of any information coming to their attention. The Securities have not been and will not be registered under the United States Securities Act of 1933, as amended, (the Securities Act) and are subject to U.S. tax law requirements. Subject to certain exceptions, the Securities may not be offered, sold or delivered within the United States or to U.S. persons. For a further description of certain restrictions on the offering and sale of the Securities and on distribution of this document, see "Subscription and Sale" below. This Offering Circular does not constitute an offer to sell or the solicitation of an offer to buy the Securities in any jurisdiction to any person to whom it is unlawful to make the offer or solicitation in such jurisdiction. The distribution of this Offering Circular and the offer or sale of Securities may be restricted by law in certain jurisdictions. The Issuer and the Managers do not represent that this Offering Circular may be 2
lawfully distributed, or that the Securities may be lawfully offered, in compliance with any applicable registration or other requirements in any such jurisdiction, or pursuant to an exemption available thereunder, or assume any responsibility for facilitating any such distribution or offering. In particular, no action has been taken by the Issuer or the Managers which is intended to permit a public offering of the Securities or the distribution of this Offering Circular in any jurisdiction where action for that purpose is required. Accordingly, no Securities may be offered or sold, directly or indirectly, and neither this Offering Circular nor any advertisement or other offering material may be distributed or published in any jurisdiction, except under circumstances that will result in compliance with any applicable laws and regulations. Persons into whose possession this Offering Circular or any Securities may come must inform themselves about, and observe, any such restrictions on the distribution of this Offering Circular and the offering and sale of Securities. In particular, there are restrictions on the distribution of this Offering Circular and the offer or sale of Securities in the United States, the United Kingdom, Hong Kong and Singapore, see "Subscription and Sale". IN CONNECTION WITH THE ISSUE OF THE SECURITIES, CITIBANK INTERNATIONAL PLC AND HSBC BANK PLC AS STABILISING MANAGER(S) (THE STABILISING MANAGER(S)) (OR PERSONS ACTING ON BEHALF OF ANY STABILISING MANAGER(S)) MAY OVER-ALLOT SECURITIES OR EFFECT TRANSACTIONS WITH A VIEW TO SUPPORTING THE MARKET PRICE OF THE SECURITIES AT A LEVEL HIGHER THAN THAT WHICH MIGHT OTHERWISE PREVAIL. HOWEVER, THERE IS NO ASSURANCE THAT THE STABILISING MANAGER(S) (OR PERSONS ACTING ON BEHALF OF A STABILISING MANAGER) WILL UNDERTAKE STABILISATION ACTION. ANY STABILISATION ACTION MAY BEGIN ON OR AFTER THE DATE ON WHICH ADEQUATE PUBLIC DISCLOSURE OF THE TERMS OF THE OFFER OF THE SECURITIES IS MADE AND, IF BEGUN, MAY BE ENDED AT ANY TIME, BUT IT MUST END NO LATER THAN THE EARLIER OF 30 DAYS AFTER THE ISSUE DATE OF THE SECURITIES AND 60 DAYS AFTER THE DATE OF THE ALLOTMENT OF THE SECURITIES. ANY STABILISATION ACTION OR OVER- ALLOTMENT MUST BE CONDUCTED BY THE RELEVANT STABILISING MANAGER(S) (OR PERSONS ACTING ON BEHALF OF ANY STABILISING MANAGER(S)) IN ACCORDANCE WITH ALL APPLICABLE LAWS AND RULES. All references in this document to U.S. dollars, U.S.$ and $ refer to the currency of the United States of America and to euro and refer to the currency introduced at the start of the third stage of European economic and monetary union pursuant to the Treaty establishing the European Community, as amended. Certain figures included in this Offering Circular (including in information incorporated by reference) have been subject to rounding adjustments; accordingly, figures shown for the same category presented in different tables may vary slightly and figures shown as totals in certain tables may not be an arithmetic aggregation of the figures which precede them. Forward-Looking Statements This Offering Circular contains forward-looking statements based on estimates and assumptions. Forwardlooking statements include, among other things, statements concerning the business, future financial condition, results of operations and prospects of ArcelorMittal, including its subsidiaries. These statements usually contain the words "believes", "plans", "expects", "anticipates", "intends", "estimates" or other similar expressions. For each of these statements, you should be aware that forward-looking statements involve known and unknown risks and uncertainties. Although it is believed that the expectations reflected in these forward-looking statements are reasonable, there is no assurance that the actual results or developments anticipated will be realised or, even if realised, that they will have the expected effects on the business, financial condition, results of operations or prospects of ArcelorMittal. 3
These forward-looking statements speak only as of the date on which the statements were made, and no obligation has been undertaken to publicly update or revise any forward-looking statements made in this Offering Circular or elsewhere as a result of new information, future events or otherwise, except as required by applicable laws and regulations. 4
CONTENTS Overview...6 Risk Factors...13 Information Incorporated by Reference...36 Conditions of the Securities...46 Overview of Provisions Relating to the Securities While Represented by the Global Securities...66 Use of Proceeds...69 Description of the Issuer...70 Recent Developments...71 Taxation...72 Subscription and Sale...74 General Information...77 Page 5
OVERVIEW The following overview does not purport to be complete and is taken from, and is qualified in its entirety by, the remainder of this Offering Circular. Words and expressions defined in "Conditions of the Securities" and "Overview of Provisions Relating to the Securities While Represented by the Global Securities" shall have the same meanings in this Overview. Issuer: ArcelorMittal (the Issuer or the Company) Risk Factors: Investing in the Securities involves certain risks. Prospective investors should consider, among other things, the risk factors set out in the "Risk Factors" section of this Offering Circular. Description of Securities: Managers: U.S.$650,000,000 Subordinated Perpetual Capital Securities BNP Paribas Citibank International plc HSBC Bank plc The Royal Bank of Scotland plc Fiscal Agent, Paying Agent and Agent Citibank, N.A., London Branch Bank: Paying Agent and Luxembourg Listing Banque Internationale à Luxembourg société anonyme Agent: Issue Date: 28 September 2012 First Call Date: 28 March 2018 First Step-up Date: 28 March 2023 Second Step-Up Date: 28 March 2038 Status: Except as otherwise provided below, the obligations of the Issuer under the Securities constitute direct, unsecured and subordinated obligations of the Issuer and will rank at all times pari passu without any preference or priority among themselves and (subject to such exceptions as are from time to time mandatory under Luxembourg law) rank (a) in priority only to the rights and claims against the Issuer of the holders of Junior Securities; (b) pari passu with the rights and claims against the Issuer of the holders of any Parity Securities; and (c) junior to the rights and claims against the Issuer of all Senior Creditors. 6
Interest: Subject as provided in "Interest Deferral" (below) the Securities bear interest: (i) (ii) from and including the Issue Date to, but excluding, the First Call Date at a rate of 8.75 per cent. per annum; and from and including the First Call Date at a rate per annum which shall be equal to the relevant Reference Rate plus the applicable Margin. Such interest shall be payable semi-annually in arrear on 28 March and 28 September of each year commencing on 28 March 2013. Reference Rate means in each case the 5-year Swap Rate determined two Business Days prior to the beginning of the relevant Reset Interest Period. Margin means: (a) in respect of the period from and including the First Call Date to, but excluding, the First Step-Up Date, 7.94 per cent. per annum; (b) in respect of the period from, and including, the First Step-Up Date to, but excluding, the Second Step-Up Date, 8.19 per cent. per annum; and (c) in respect of the period from, and including, the Second Step-Up Date, 8.94 per cent. per annum. In the event of a Change of Control, unless the Issuer redeems the Securities (in whole but not in part) in accordance with the Conditions of the Securities, the rate of interest payable on the Securities will be subject to an increase by 5.00 per cent. per annum above the otherwise Prevailing Interest Rate from (and including) (i) the date falling 90 days after the occurrence of the Change of Control or (ii) if later, the settlement of the Tender Offer. Interest Deferral: Interest shall be due and payable on each Interest Payment Date unless the Issuer elects not to pay such interest. Any such election not to pay interest shall not constitute a default of the Issuer or any other breach of obligations under the Securities or for any other purpose. If the Issuer decides not to pay the interest on an Interest Payment Date, the Issuer shall notify the Agents and the Securityholders not less than ten and not more than 15 Business Days prior to the relevant Interest Payment Date. Any interest not paid due to such an election of the Issuer shall constitute Optionally Deferred Payments. Optionally Deferred Payments shall themselves bear interest at the Prevailing Interest Rate as provided in Condition 4. The nominal amount of any Optionally Deferred Payments together with any interest thereon pursuant to Condition 4 shall constitute Optionally Outstanding Payments. 7
The Issuer may pay outstanding Optionally Outstanding Payments (in whole but not in part) at any time upon giving not less than ten and not more than 15 Business Days' notice (which notice shall be irrevocable and will oblige the Issuer to pay the relevant Optionally Outstanding Payments on the payment date specified in such notice). Any outstanding Optionally Outstanding Payments shall become due and payable (in whole but not in part) and shall be paid by the Issuer on any Mandatory Settlement Date. No fixed maturity date: Early Redemption at the Option of the Issuer: Early Redemption due to a Gross Up Event: Early Redemption due to an Accounting Event a Rating Agency Event or a Tax Event: Early Redemption in the case of Purchase of more than 80 per cent. of the Initial Aggregate Principal Amount: Early Redemption due to a Change of Control: The Securities will be perpetual securities in respect of which there is no fixed maturity date. The Issuer may call and redeem the Securities (in whole but not in part) on the First Call Date, on the First Step-up Date or on any Interest Payment Date thereafter at their principal amount plus interest accrued to but excluding the redemption date and any Optionally Outstanding Payments. If a Gross Up Event occurs, the Issuer may call and redeem the Securities (in whole but not in part) at any time prior to the First Step-up Date at their principal amount plus any interest accrued to but excluding the redemption date and any Optionally Outstanding Payments. If any of an Accounting Event a Rating Agency Event or a Tax Event occurs, the Issuer may call and redeem the Securities (in whole but not in part) at any time prior to the First Step-up Date (other than on the First Call Date) at 101 per cent. of their principal amount plus any interest accrued to but excluding the redemption date and any Optionally Outstanding Payments. In the event that the Issuer and/or any Subsidiary of the Issuer has, severally or jointly, purchased more than 80 per cent. of the initial aggregate principal amount of the Securities the Issuer may call and redeem the remaining Securities (in whole but not in part) at any time prior to the First Step-up Date (other than on the First Call Date) at their Early Redemption Amount. In the event of a Change of Control, the Issuer may during the period commencing (i) 90 days after the occurrence of a Change of Control or (ii) if later, the settlement of the Tender Offer, and ending 60 days thereafter call and redeem the Securities (in whole but not in part) at 101 per cent. of their principal amount (prior to the First Step-up Date (other than on the First Call Date)) and at their principal amount (on the First Call Date, the First Step-up Date or following the First Step-up Date), in either case plus any interest accrued to but excluding the redemption date and any 8
Optionally Outstanding Payments. For so long as the Securities remain outstanding, if (i) a Change of Control occurs and (ii) the Issuer elects to redeem the Securities, the Issuer will as soon as reasonably practicable following such event launch a tender offer (the Tender Offer) for all outstanding unsubordinated Debt Securities (which do not already contain a contractual right of the holders of such Debt Securities for such securities to be redeemed or repurchased as a result of the events giving rise to the Change of Control) at a price equal to not less than their aggregate principal amount plus accrued and unpaid interest. The Issuer will also launch such tender offer in such a way as to ensure that the repurchase of any unsubordinated Debt Securities tendered to it will be effected prior to any redemption of the Securities. Enforcement Events: Enforcement Events under the Securities shall be limited to: (a) (b) Non-Payment: any amount of interest (including Optionally Outstanding Payments) or any principal on any Security shall not be paid on the due date thereof and such non-payment shall not be remedied within a period of twenty days; or Bankruptcy, Dissolution or Liquidation: a judgment is issued for the bankruptcy (faillite), dissolution or liquidation (liquidation judiciaire) of the Issuer or if the Issuer is wound-up, dissolved or liquidated for any other reason, in either case other than for the purposes of or pursuant to a merger, amalgamation, reorganisation, division or restructuring whilst solvent, where the (or a) continuing entity assumes substantially all of the assets and obligations of the Issuer (including, for the avoidance of doubt, the Securities). If an Enforcement Event occurs, then, in the case of paragraph (a) above, the Holder of such Security may, at its discretion and, subject to any applicable laws, without further notice, institute proceedings for the bankruptcy of the Issuer and/or prove in any bankruptcy (or other insolvency proceedings) of the Issuer in respect of any payment obligations of the Issuer arising under the Securities, but may take no other action in respect of such non-payment and, in the case of paragraph (b) above, the Securities shall become immediately due and repayable at their principal amount together with accrued interest and any Optionally Outstanding Payments (subject always to the ranking described in "Status" above). However, (i) in case of (a) or (b) above the Holder of such Security or Coupon may take no other action, and in particular no other action that would influence the outcome of a bankruptcy proceeding or 9
restructuring outside bankruptcy; and (ii) in case of (b) above if such judgment that would otherwise constitute an Enforcement Event is overturned on appeal or otherwise validly nullified, then such judgment shall be deemed to have never constituted an Enforcement Event and the Securities will be deemed to have not become due and repayable as a result thereof. Meetings of Securityholders: Modification: Withholding Tax and Additional Amounts: Listing and admission to trading: Governing Law: The Agency Agreement contains provisions for calling meetings of Securityholders to consider matters affecting their interests generally. These provisions permit defined majorities to bind all Securityholders including Securityholders who did not attend and vote at the relevant meeting and Securityholders who voted in a manner contrary to the majority. The Conditions of the Securities may be amended without the consent of the Securityholders to correct a manifest error. In addition, the parties to the Agency Agreement may agree to modify any provision thereof, but the Issuer shall not agree, without the consent of the Securityholders, to any such modification unless it is of a formal, minor or technical nature, it is made to correct a manifest error or it is, in the opinion of the Issuer, not materially prejudicial to the interests of the Securityholders. All payments of principal and interest by or on behalf of the Issuer in respect of the Securities shall be made free and clear of, and without withholding or deduction for any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within the Grand Duchy of Luxembourg or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. In that event, the Issuer shall pay such additional amounts as may be necessary in order that each Securityholder after such deduction or withholding will receive the full amount then due and payable thereon in the absence of such deduction or withholding, subject to customary exceptions, as further described in Condition 7 of the Conditions of the Securities. Application has been made to the CSSF to approve this document as a prospectus and to the Luxembourg Stock Exchange for the listing of the Securities on the Official List of the Luxembourg Stock Exchange and admission to trading on the Luxembourg Stock Exchange's regulated market. The Securities and any non-contractual obligations arising out of or in connection with the Securities shall be governed by, and shall be construed in accordance with, English law, except that Condition 3 shall be governed by, and shall be construed in accordance with, the laws of the Grand Duchy 10
of Luxembourg. Form: Credit Ratings: The Securities will be in bearer form in the denominations of U.S.$200,000 and integral multiples of U.S.$1,000 in excess thereof up to and including U.S.$399,000. The Securities are expected to be rated Ba2 by Moody's Investors Service Ltd., B+ by Standard & Poor's Credit Market Services France SAS and BB by Fitch Ratings Ltd. Moody's Investors Service Ltd. is established in the European Union and is registered under Regulation (EC) No. 1060/2009 (as amended) (the CRA Regulation). As such Moody's Investors Service Ltd. is included in the list of credit rating agencies published by the European Securities and Markets Authority on its website (as referred to below) in accordance with such Regulation. Standard & Poor's Credit Market Services France SAS is established in the European Union and is registered under the CRA Regulation. As such Standard & Poor's Credit Market Services France SAS is included in the list of credit rating agencies published by the European Securities and Markets Authority on its website (as referred to below) in accordance with such Regulation. Fitch Ratings Ltd. is established in the European Union and is registered under the CRA Regulation. As such Fitch Ratings Ltd. is included in the list of credit rating agencies published by the European Securities and Markets Authority on its website (as referred to below) in accordance with such Regulation. As at the date of this Offering Circular, the website referred to above is: www.esma.europa.eu/page/list-registered-and-certified- CRAs A rating is not a recommendation to buy, sell or hold securities and may be subject to revision, suspension or withdrawal at any time by the assigning rating organisation. Selling Restrictions: Use of Proceeds: The Securities have not been and will not be registered under the Securities Act and, subject to certain exceptions, may not be offered or sold within the United States. The Securities may be sold in other jurisdictions (including the United Kingdom, Hong Kong and Singapore) only in compliance with applicable laws and regulations. See "Subscription and Sale" below. The net proceeds of the issue of the Securities will be applied by the Issuer for the general financing purposes of 11
the Issuer and its consolidated subsidiaries, including the repayment of existing debt. Intentions regarding redemption and repurchase of the Securities: The following paragraphs shall not form part of the Conditions. Unless the rating assigned by Standard & Poor's Credit Market Services France SAS to the Issuer is at least BB+ (or such similar nomenclature then used by Standard & Poor's Credit Market Services France SAS) and the Issuer is comfortable that such rating would not fall below this level as a result of such redemption or repurchase the Issuer intends (without thereby assuming a legal obligation), during the period from and including the Issue Date of the Securities to but excluding the Second Step-Up Date, in the event of (a) an early redemption of the Securities (other than an early redemption on a Change of Control), or (b) a repurchase of the Securities of more than (x) 10 per cent. of the aggregate principal amount of the Securities originally issued in any period of 12 consecutive months or (y) 25 per cent. of the aggregate principal amount of the Securities originally issued in any period of ten consecutive years, if the Securities are assigned an "equity credit" (or such similar nomenclature then used by Standard & Poor's Credit Market Services France SAS at the time of such redemption or repurchase), that it will redeem or repurchase the Securities only to the extent the aggregate principal amount of the Securities to be redeemed or repurchased does not exceed the net proceeds received by the Issuer or any Subsidiary of the Issuer during the 360-day period prior to the date of such redemption or repurchase from the sale or issuance by the Issuer or such Subsidiary to third party purchasers (other than group entities of the Issuer) of securities which are assigned by Standard & Poor's Credit Market Services France SAS, at the time of sale or issuance, an "equity credit" (or such similar nomenclature used by Standard & Poor's Credit Market Services France SAS from time to time) that is equal to or greater than the "equity credit" assigned to the Securities to be redeemed or repurchased at the time of their issuance (but taking into account any changes in hybrid capital methodology or another relevant methodology or the interpretation thereof since the issuance of the Securities). Terms used but not defined in the preceding sentence shall have the meaning set out in the Conditions. 12
RISK FACTORS Prior to investing in the Securities, potential investors should take into account, together with all other information contained in this Offering Circular, the factors described below. These considerations are not exhaustive and other considerations, including some which may not be presently known to the Responsible Person, or which the Responsible Person currently deems immaterial, may impact any investment in the Securities. In addition, the value of the Securities could decline due to any of these risks, and prospective investors may lose some or all of their investment. Words and expressions defined in the "Conditions of the Securities" below or elsewhere in this Offering Circular have the same meanings in this section. Investing in the Securities involves certain risks. Prospective investors should consider, among other things, the risk factors set out below. The order in which the following risk factors are listed is not an indication of their likelihood to occur or of the extent of their commercial consequences. Risks Related to the Securities The Issuer's obligations under the Securities are subordinated. The Issuer's obligations under the Securities will be unsecured and subordinated and will rank junior in priority of payment to the rights and claims against the Issuer of all Senior Creditors (as defined in the Conditions of the Securities) including those to whom the Issuer has granted guarantees of obligations of one or more of its subsidiaries. Although the Securities may pay a higher rate of interest than comparable securities which are not subordinated, there is a real risk that an investor in the Securities will lose all or some of his investment should the Issuer or potentially one or more of its subsidiaries whose obligations it has guaranteed become subject to insolvency proceedings. Interest payments under the Securities may be deferred. The Issuer may defer the payment of interest on the Securities indefinitely, unless and until a Mandatory Settlement Date (as defined in the Conditions of the Securities) occurs. In no event will holders of Securities be able to accelerate their Securities as a result of such deferral; such holders will have claims only for amounts then due and payable on their Securities. After the Issuer has fully paid all deferred interest on the Securities and if Securities remain outstanding, future interest payments on the Securities will be subject to further deferral as described above. Any deferral of interest payments is likely to have an adverse effect on the market price of the Securities. In addition, as a result of the interest deferral provision of the Securities, the market price of the Securities may be more volatile than the market prices of other debt securities in respect of which original issue discount or interest accruals are not subject to such deferrals and may be more sensitive generally to adverse changes in the Issuer's financial condition. Resettable fixed rate securities have a market risk. A holder of fixed rate securities is particularly exposed to the risk that the price of such securities falls as a result of changes in the market interest rate. While the nominal remuneration rate of the Securities is fixed until the First Call Date (with a reset of the initial fixed rate on every Reset Date as set out in the Conditions of the Securities), the current interest rate on the capital market (the market interest rate) typically changes on a daily basis. As the market interest rate changes, the price of the Securities also changes, but in the 13
opposite direction. If the market interest rate increases, the price of the Securities would typically fall. If the market interest rate falls, the price of the Securities would typically increase. Holders should be aware that movements in these market interest rates can adversely affect the price of the Securities and can lead to losses for the Holders if they sell the Securities. Interest rate reset may result in a decline of yield. A holder of securities with a fixed interest rate that will be reset during the term of the securities (as will be the case for the Securities on each Reset Date (as defined in the Conditions of the Securities) if not previously redeemed) is exposed to the risk of fluctuating interest rate levels and uncertain interest income. Interest on Optionally Deferred Payments may not be enforceable under Luxembourg law Subject to certain non relevant exceptions, the accrual of interest on interest is prohibited by article 1154 of the Luxembourg Civil Code. Based on identical provisions of article 1154 of the French Civil Code, French courts have ruled that a valid foreign law governed interest on interest clause is enforceable in France. Relevant legal literature is generally supportive of this position, but Luxembourg courts do not appear to have ruled on this point. The Condition of the Securities providing for the accrual of interest on Optionally Deferred Payments is valid and enforceable as a matter of English law. Whilst the Issuer's position is that this Condition, or an English court order enforcing this Condition, will be enforceable in Luxembourg, it cannot be ruled out that a Luxembourg court may refuse such enforcement. An active market for the Securities may not develop. Application has been made for the Securities to be listed on the official list of the Luxembourg Stock Exchange and to be admitted to trading on the regulated market of the Luxembourg Stock Exchange. However, there can be no assurance that an active trading market for the Securities will develop, or, if one does develop, that it will be maintained. If an active trading market for the Securities does not develop or is not maintained, the market or trading price and liquidity of the Securities may be adversely affected. The Issuer is entitled to buy the Securities in the open market or otherwise, as described in Condition 5.9, and the Issuer may issue further Securities, as described in Condition 13. Such transactions may favourably or adversely affect the price development of the Securities. If additional and competing products are introduced in the markets, this may adversely affect the value of the Securities. The Securities are perpetual but may be redeemed at the option of the Issuer. The Issuer is under no obligation to redeem the Securities at any time and the Holders have no right to call for their redemption. Therefore, prospective investors should be aware that they may be required to bear the financial risks of an investment in the Securities indefinitely. The Issuer may redeem all outstanding Securities in the event of a Gross Up Event, an Accounting Event, a Tax Event, a Rating Agency Event or a Change of Control (each as defined in the Conditions) or if the Issuer or any Subsidiary of the Issuer has purchased more than 80 per cent. of the initial aggregate principal amount if the Securities, in each case in accordance with the Conditions. In addition, the Securities are redeemable at the Issuer's option on the First Call Date, on the First Step-up Date or on any Interest Payment Date thereafter. In the case of a redemption by the Issuer, an investor may not be able to reinvest the redemption proceeds in a comparable security at an effective interest rate as high as that of the Securities. 14
Because the Global Securities are held by or on behalf of Euroclear and Clearstream, Luxembourg, investors will have to rely on their procedures for transfer, payment and communication with the Issuer. The Securities will be represented by one or more Global Securities. Such Global Securities will be deposited with a common depositary for Euroclear and Clearstream, Luxembourg. Except in the circumstances described in the relevant Global Security, investors will not be entitled to receive definitive Securities. Euroclear and Clearstream, Luxembourg will maintain records of the beneficial interests in the Global Securities. While the Securities are represented by one or more Global Securities, investors will be able to trade their beneficial interests only through Euroclear and Clearstream, Luxembourg. While the Securities are represented by one or more Global Securities the Issuer will discharge its payment obligations under the Securities by making payments to the common depositary for Euroclear and Clearstream, Luxembourg for distribution to their account holders. A holder of a beneficial interest in a Global Security must rely on the procedures of Euroclear and Clearstream, Luxembourg to receive payments under the Securities. The Issuer has no responsibility or liability for the records relating to, or payments made in respect of, beneficial interests in the Global Securities. Holders of beneficial interests in the Global Securities will not have a direct right to vote in respect of the Securities. Instead, such holders will be permitted to act only to the extent that they are enabled by Euroclear and Clearstream, Luxembourg to appoint appropriate proxies. Denominations involve integral multiples: definitive Securities. The Securities have denominations consisting of a minimum of U.S.$200,000, plus integral multiples of U.S.$1,000 in excess thereof up to and including U.S.$399,000. It is possible that the Securities may be traded in amounts that are not integral multiples of U.S.$200,000. In such a case a holder who, as a result of trading such amounts, holds an amount which is less than U.S.$200,000 in his account with the relevant clearing system at the relevant time may not receive a definitive Security in respect of such holding (should definitive Securities be printed) and would need to purchase a principal amount of Securities such that its holding amounts to U.S.$200,000. If definitive Securities are issued, holders should be aware that definitive Securities which have a denomination that is not an integral multiple of U.S.$200,000 may be illiquid and difficult to trade. The credit rating of the Securities may not reflect all associated risks The Securities are expected be rated by Moody's Investors Service Ltd., Standard & Poor's Credit Market Services France SAS and Fitch Ratings Ltd. A credit rating is not a recommendation to buy, sell or hold Securities and may be subject to revision, suspension or withdrawal at any time by the relevant rating organisation. Credit rating agencies continually review their ratings for companies that they follow, including ArcelorMittal. The trading price for the Securities may be directly affected by ArcelorMittal's credit rating. Any adverse change in an applicable credit rating could adversely affect the trading price for the Securities. Rating agencies may change their methodologies for rating securities with features similar to the Securities in the future. This may include the relationship between ratings assigned to an issuer's senior securities and ratings assigned to securities with features similar to the Securities, referred to as "notching". Any adverse change in an applicable notching could adversely affect the trading price for the Securities. The ratings assigned by the credit rating agencies to the Securities may not reflect the potential impact of all risks related their structure, market, the factors set forth in this "Risk Factors" section and other factors that may affect the market value of the Securities. 15
Since the Issuer conducts its operations through subsidiaries, the right of the investors to receive payments on the Securities is subordinated to the other liabilities of the Issuer's subsidiaries The Issuer is a holding company which is dependent on the earnings and cash flows of, and dividends and distributions from, its operating subsidiaries to meet its debt servicing obligations. The Issuer's subsidiaries are not guarantors of the Securities. Moreover, these subsidiaries are not required and may not be able to pay dividends to the Issuer. The Issuer's subsidiaries are not bound by obligations under the Securities. Claims of the creditors of the Issuer's subsidiaries have priority as to the assets of such subsidiaries over the claims of the Issuer's creditors. Consequently (in addition to the subordination described in "The Issuer's obligations under the Securities are subordinated" above), holders of the Securities are in effect structurally subordinated in insolvency to the prior claims of the creditors of the Issuer's subsidiaries. The Issuer's ability to make debt service payments depends on its ability to transfer income and dividends from its subsidiaries The Issuer is a holding company with no significant assets other than direct and indirect interests in the many subsidiaries through which it conducts operations. A number of the Issuer's subsidiaries are located in countries that may impose regulations restricting the payment of dividends outside of the country through exchange control regulations. Furthermore, the continued transfer to the Issuer of dividends and other income from its subsidiaries is in some cases limited by various credit or other contractual arrangements and/or tax constraints, which could make such payments difficult or costly. If in the future these restrictions are increased or if the Issuer is otherwise unable to ensure the continued transfer of dividends and other income to it from these subsidiaries, its ability to pay dividends and/or make debt payments (including payments on the Securities) will be impaired. The Securities do not restrict the Issuer or its subsidiaries from incurring additional debt or guaranteeing any debt of others in the future. Since the Securities are unsecured, investors' rights to receive payments may be adversely affected The Securities will be unsecured. If ArcelorMittal defaults on the Securities, or after bankruptcy, liquidation or reorganisation, then, to the extent ArcelorMittal has granted security to a creditor over its assets, the assets that secure debts owed to that creditor will be used to satisfy the obligations under that secured debt before ArcelorMittal can make payment on its unsecured obligations (including, subject as described in "The Issuer's obligations under the Securities are subordinated" above, the Securities). There may only be limited assets available to make payments on the Securities in the event of an acceleration of the Securities. If there is not enough collateral to satisfy the obligations of the secured debt, then creditors of the remaining amount of secured debt would share equally with all unsubordinated unsecured indebtedness. ArcelorMittal is not restricted in its ability to dispose of its assets by the terms of the Securities ArcelorMittal is permitted to sell or otherwise dispose of its assets to another corporation or other entity under the terms of the Securities. ArcelorMittal is also generally permitted to create security over its assets to secure other securities or debt instruments. If ArcelorMittal were to decide to dispose of its assets (other than under certain circumstances in a liquidation context), holders of the Securities will not be entitled to declare an acceleration of the Securities, and those assets will no longer be available to support payments on the Securities. Luxembourg insolvency laws may adversely affect a recovery by the holders of the Securities The Issuer is a Luxembourg company. Luxembourg insolvency laws may make it more difficult for holders of the Securities to effect a restructuring of the Issuer or to recover the amount they would have recovered in 16
a liquidation or bankruptcy proceeding in other jurisdictions. There are a number of insolvency regimes under Luxembourg law. Bankruptcy proceedings (faillite) are primarily designed to liquidate and distribute the assets of a debtor to its creditors. Three formal corporate rescue procedures exist: controlled management (gestion contrôlée), which involves one or several commissioners (commissaires à la gestion contrôlée) preparing a plan of reorganisation or a plan for the realisation and distribution of the assets; moratorium (concordat préventif de faillite), whereby a judge is appointed to oversee the negotiation of an agreement between the debtor and his creditors; and the suspension of payments (sursis de paiement), whereby one or more commissioners is/are appointed by the court to oversee the management of the company during the suspension of payments period. A judgment in bankruptcy proceedings (faillite) has the effect of removing the power from a company to manage its assets and of stopping all attachment or garnishment proceedings brought by unsecured or nonprivileged creditors. However, this type of judgment has no effect on creditors holding certain forms of security, such as pledges on certain types of assets. A secured creditor holding a pledge can retain possession of the pledged assets or can enforce its security interest if an event of default has occurred under the security agreement. Further, in a bankruptcy proceeding (faillite), the debtor has the right to make composition (concordat) proposals which are inter alia subject to approval by creditors representing at least 75% of all admitted unsecured claims. The ratification of a composition in a bankruptcy proceeding (faillite) or in a moratorium (concordat préventif de faillite) will have no effect on creditors who, having secured claims, did not participate in the composition proceedings and did not, therefore, waive their rights or priority, mortgages or pledges. These creditors may continue to act against the debtor in order to obtain payment of their claims and they may enforce their rights, obtain attachments and obtain the sale of the assets securing their claims. Equally, the procedure of suspension of payments (sursis de paiement) once approved has no effect on secured creditors. A recovery under Luxembourg law, therefore, could involve a sale of the assets of the debtor in a manner that does not reflect the going concern value of the debtor. Consequently, Luxembourg insolvency laws could preclude or inhibit the ability of the holders of the Securities to effect a restructuring of the Issuer and could reduce their recovery in a Luxembourg insolvency proceeding. In connection with Luxembourg bankruptcy proceedings, the assets of a debtor are generally liquidated and the proceeds distributed to the debtor's creditors on the basis of the relative claims of those creditors and their ranking, and certain parties (such as secured creditors) will have special rights that may adversely affect the interests of holders of the Securities whose rights will in addition be subordinated to those of unsecured Senior Creditors. The claim of a creditor may be limited depending on the date the claim becomes due and payable in accordance with its terms. Each of these claims will have to be resubmitted to the Issuer's receiver to be verified by the receiver. Any dispute as to the valuation of claims will be subject to court proceedings. These verification procedures could cause holders of the Securities to recover less than the principal amount of their Securities or less than they could recover in a liquidation governed by the laws of another jurisdiction. Such verification procedures could also cause payments to the holders of the Securities to be delayed compared with holders of undisputed claims. Change of Law The Conditions of the Securities (other than Condition 3 which is governed by Luxembourg law) are governed by English law in effect as at the date of this Offering Circular. No assurance can be given as to the impact of any possible judicial decision or change in English or Luxembourg law or the official application or interpretation of English or Luxembourg law after the date of this Offering Circular. 17
Market Value of the Securities The market value of the Securities will be affected by the creditworthiness of the Issuer and the Group and a number of additional factors, including market interest and yield rates. The value of the Securities depends on a number of interrelated factors, including economic, financial and political events in the Grand Duchy of Luxembourg or elsewhere where the Group has significant operations, including factors affecting capital markets generally and the stock exchange on which the Securities are traded. The price at which a Securityholder will be able to sell the Securities may be at a discount, which could be substantial, from the issue price or the purchase price paid by such purchaser. The trading market for debt securities may be volatile and may be adversely impacted by many events The market for debt securities issued by issuers such as ArcelorMittal is influenced by economic and market conditions and, to varying degrees, market conditions, interest rates, currency exchange rates and inflation rates in other European and other industrialised countries. There can be no assurance that events in the Grand Duchy of Luxembourg, Europe, the United States or elsewhere will not cause market volatility or that such volatility will not adversely affect the price of the Securities or that economic and market conditions will not have any other adverse effect. Fluctuations in interest rates may give rise to arbitrage opportunities based upon changes in the relative value of the Securities. Any trading by arbitrageurs could, in turn, affect the trading prices of the Securities. Exchange rate risks The Issuer will pay principal and interest on the Securities in U.S. dollars. This presents certain risks relating to currency conversions if an investor's financial activities are denominated principally in a currency or currency unit (the Investor's Currency) other than U.S. dollars. These include the risk that exchange rates may significantly change (including changes due to devaluation of the U.S. dollar or revaluation of the Investor's Currency) and the risk that authorities with jurisdiction over the Investor's Currency may impose or modify exchange controls. An appreciation in the value of the Investor's Currency relative to U.S. dollars would decrease (1) the Investor's Currency-equivalent yield on the Securities, (2) the Investor's Currency-equivalent value of the principal payable on the Securities and (3) the Investor's Currency-equivalent market value of the Securities. This risk is in addition to any performance risk that relates to the Issuer or the Securities. Modification and waivers The Conditions contain provisions for calling meetings of Securityholders to consider matters affecting their interests generally. The provisions permit defined majorities to bind all Securityholders including Securityholders who did not attend and vote at the relevant meeting and Securityholders who voted in a manner contrary to the majority. The Securities may not be a suitable investment for all investors Each potential investor must make its own determination of the suitability of any such investment, with particular reference to its own investment objectives and experience, and any other factors which may be relevant to it in connection with such investment, either alone or with the help of a financial adviser. In particular, each potential investor should: (i) have sufficient knowledge and experience to make a meaningful evaluation of the Securities, the merits and risks of investing in the Securities and the information contained or incorporated by reference in this Offering Circular or any applicable supplement; 18