Struggling steelmaker BlueScope Steel has raised $338 million so far in a $600 million capital raising as it tries to repay some of its debt.

About 87 per cent of institutional shareholders have participated in the raising, leaving a shortfall of $70 million that was successfully sold into the market at the same 40 cent per share offer price.

The company’s shares dropped 12.67 cents, or 24.5 per cent, to 39 cents on Thursday.

That was below BlueScope’s theoretical `ex-rights’ price of about 49 cents, which allows for the increased number of shares.

Australia’s biggest steelmaker will try to raise another $262 million from Tuesday when it asks retail shareholders for funds in the retail component of the four-for-five underwritten accelerated renounceable rights offer.

The successful completion of the institutional component of the equity raising allows BlueScope Steel to reduce debt, strengthen its financial position and achieve a more appropriate capital structure, BlueScope chairman Graham Kraehe said.

Bluescope has forecast a first half loss of up to $80 million as weak domestic demand cripples earnings and it tries to reduce almost $1.6 billion in net debt and strengthen its financial position.

The fundraising exercise is heavily discounted to the 61 cent share price the company’s stocks closed at on Tuesday.

Its shares have plummeted by nearly 75 per cent since February.