On July 1, Finland-based stainless steel producer Outokumpu announced that the company has signed a letter of intent with Andrea Gatti regarding the joint venture arrangement for Outokumpu's tubular unit (OSTP). A final agreement on the joint venture is expected to be signed by the end of the third quarter.
According to the final agreement a company controlled by Mr. Gatti will acquire 36 percent of the shares in OSTP. Additionally, Mr. Gatti will have an option to acquire shares to 51 percent ownership in a three-year time period. It is also agreed that Outokumpu will remain OSTP's main raw material supplier.
OSTP will be separated from Outokumpu and it will be managed through the OSTP board, with a chairman appointed by Outokumpu. The turnaround plan for OSTP will be further detailed by the partners in the joint venture and it will include significant streamlining of the production structure, optimization of the product portfolio and general cost reduction.
OSTP has recorded losses for the past three years and its operating loss in 2010 totaled close to €40 million.