OneSteel and Smorgon agree on merger terms with BlueScope

OneSteel Limited (OneSteel), Smorgon Steel Group and BlueScope Steel Limited (BlueScope) have announced that they have reached an agreement in principle on merger conditions, in line with the merger structure announced by the companies on June 26, 2006. Under the agreement, BlueScope is to acquire Smorgon Steel's metal distribution for a total of $700 million. The acquisition is subject to satisfactory due diligence investigations into Smorgon Steel Distribution and to satisfactory negotiations and formulation of the sale and purchase agreement to be concluded between the parties. BlueScope will assume the position of acquirer and re-supplier of scrap for the other two companies. Smorgon Steel will organize the scheme of arrangements with its shareholders whereby OneSteel will acquire all their shares in return for OneSteel's shares, as previously agreed in the scheme of arrangements announcement of June 26, 2006. Before the scheme becomes effective, OneSteel will buy BlueSteel's 19.98 percent stake in Smorgon Steel for a cash price equivalent to the value payable to Smorgon Steel shareholders under the scheme. The parties have a two-week period to finalize the above-mentioned conditions. In the event of disagreement, the proposal and agreement in principle will be terminated. In that situation, Smorgon Steel and OneSteel intend to pursue their merger proposal announced on December 18, 2006. If finalized, the new proposal will be subject to approval from the Australian Competition and Consumer Commission (ACCC) and certain tax rulings.