Venezuela, Ternium agree on $1.97 Billion for Sidor

Friday, 08 May 2009 14:21:24 (GMT+2)

Ternium SA, one of the leading Latin American steel companies, and a subsidiary of the Argentine-Italian conglomerate Techint announced the completion of the transfer of its entire 59.7 percent stake in Venazuelan steelmaker Siderúrgica del Orinoco (Sidor) to the Venezuelan governmental entity, Corporación Venezolana de Guayana (CVG) for $1.97 billion.

The transfer was effected as a result of Venezuela's Decree Law 6058, ordering that Sidor, its subsidiaries and associated companies be transformed into state-owned enterprises and declared the activities of such companies of public and social interest. While CVG had assumed operational control of Sidor on July 12, 2008, Ternium had retained formal title over the shares until now.

Accordingly, Ternium agreed to receive an aggregate amount of $1.97 billion as compensation for its Sidor shares. Of that amount, CVG has paid $400 million in cash, and the rest is divided in two tranches; the first tranche of $945 million will be paid in six equal quarterly installments, while the second tranche will be paid at maturity in October 2010, will be adjusted within quarterly mandatory prepayment events based on the increase of the WTI crude oil price over its May 6, 2009 level.

Ternium had since been locked in negotiations with the government over a payment plan.

The Venezuelan government, which holds a 20 percent share in the company, will now have a 79.7 percent stake in Sidor. The remaining 20 percent will remain in the hands of the company's workers and former employees.

Venezuela president Hugo Chavez's government has nationalized major players in the communications, electricity, and cement sectors, as well as four major oil projects, in the past two years.

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