STOCKS NEWS EUROPE-Outokumpu slides after rights issue

Shares in Finnish stainless steel maker Outokumpu (Other OTC: OUTKF - news) fall 14.2 percent on Monday to 0.15 euros as investors sold the stock on the first subscription day of its 665-million-euro ($922 million)rights offering.

Loss-making Outokumpu late last year announced the rights issue as part of a larger financing plan that included asset sales that partly reverted an earlier deal with ThyssenKrupp (Xetra: TKA.DE - news) .

In the rights issue, the company offered 8.3 billion new shares, boosting its total number of shares to about 10.7 billion.

"The stock as well as the subscription rights are being sold due to the dilution by the rights issue. It shows not all owners are willing or able to put more money into the company," said Antti Viljakainen, analyst at Inderes Equity Research.

"My target price for the stock is 12 cents, so to me there is room to fall more."

Outokumpu last month reported a rising debt ratio, raising concerns over its financing costs and the slow pace of restructuring in response to weak European demand.

($1 = 0.7214 euros)

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