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May-01-2008UPDATE 1-Venezuela to take control of Ternium Sidor(topic overview)
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Venezuelan President Hugo Chavez is threatening to expropriate steelmaker Ternium Sidor, if the company can not reach an agreement with his government by Tuesday over its nationalization. President Chavez made the announcement during his weekly Sunday broadcast, after Venezuela said it would offer Ternium Sidor about $800 million for a majority stake. The Argentine-controlled company wants four billion dollars for its holdings. Mr. Chavez said he has asked the country's vice president, Ramon Carrizalez, to meet with company officials to discuss the issue. Earlier this month, the government said it will take control of Ternium Sidor to protect workers' rights. [1] The threat comes after Chavez accused shareholders for demanding excessive compensation for the company's nationalization. The Caracas government offered Ternium Sidor about $800 million for a majority stake but the Argentine-controlled company is demanding $4 billion dollars for its 60 percent stake in the steel maker. The Venezuelan president ordered Sidor nationalized earlier this month, siding with the workers who fought for improved salaries and benefits.[2] CARACAS, Venezuela - President Hugo Chavez on Sunday threatened to expropriate Venezuela's largest steel maker unless the soon-to-be-nationalized company revises what he called excessive compensation demands. Chavez dismissed a request made by Sidor's parent company, Luxembourg-based Ternium SA, for US$4 billion (euro2.6 billion) in exchange for its 60 percent stake in the steel maker. "I'm not going to pay $4 billion for that company," Chavez said during his weekly radio and television program. "If they don't want to reach an agreement with us, I'll sign an expropriation decree.[3] President Hugo Chávez threatened to expropriate Venezuela's largest steel maker, which is owned by an Argentine group, due to what he said are the soon-to-be-nationalized company's excessive compensation demands. Chávez said he could not help but laugh when he heard that Sidor's parent company, Luxembourg-based Ternium SA, is asking for at least 4 billion dollars in compensation for its 60% stake in Sidor.[4]
It is reported that Mr Hugo Chavez president of Venezuela has suggested that Ternium SA should accept a fair' price for the nationalization of its 60% stake in Sidor immediately or face expropriation because shareholders are demanding excessive compensation for the company's nationalization. Mr Chavez said that he is prepared to occupy the company's facilities on April 29th 2008 should the company and the government fail to reach an agreement during a final meeting tomorrow. He said "I will sign the expropriation decree and take control immediately of the company.[5] April 29 (Bloomberg) -- Venezuelan President Hugo Chavez said he would like to reach an agreement with Luxembourg-based Ternium SA for the nationalization of its local steel-making unit, backing off threats to expropriate the company's assets. Chavez, who on April 27 said he might occupy Ternium's Venezuelan plant today if the company didn't accept a "fair'' price, said government ministers are meeting with company representatives.[6]
CARACAS, April 29 (Reuters) - Venezuela's President Hugo Chavez said on Tuesday he wants a "win-win" takeover deal with Argentine steelmaker Ternium, just days after threatening to expropriate the company's local unit. His vice president and other top officials met with a delegation from Ternium (TX.N: Quote, Profile, Research ) to discuss the price the government will pay for the company's Venezuelan steel plant, Sidor, which Chavez has vowed to nationalize.[7] CARACAS, April 30 (Reuters) - Venezuela's President Hugo Chavez said on Wednesday the government will take control of the country's top steelmaker, Argentine-controlled Ternium Sidor, even as negotiations with the company continue. Socialist Chavez signed a decree to nationalize the steelmaker and said he would name a commission to take control of the company, part of his drive to increase government participation in key industries. "We are going to sign a law by which Venezuela will recover our Sidor," he told cheering union members. "This decree names a commission to take control of the company and put it to the interests of the nation."[8]
Venezuelan Mining Minister Rodolfo Sanz said last week that Venezuela values Ternium's stake at about US$800 million (euro513 million), but plans to pay even less after subtracting the company's outstanding debts. Chavez has made nationalizing major industries a centerpiece of his socialist agenda. His government last year seized majority control of the country's largest telecommunications and electricity companies, and of joint oil ventures previously run by some of the world's largest oil companies. Earlier this month, along with Sidor, he announced plans to nationalize cement companies including Mexico's Cemex SAB, France's Lafarge SA and Switzerland's Holcim Ltd. The government is now negotiating sale terms with the companies, which will be allowed to stay on as minority partners.[3] Sidor, as the company is known, was previously controlled by Luxembourg-based Ternium SA. Chavez announced plans to nationalize Sidor earlier this month. Venezuelan officials had been talking with Ternium representatives to reach a deal for its 60 percent stake in Sidor, but the two sides were unable to reach an agreement. Chavez said the company demanded excessive compensation for its share.[9] Venezuelan officials are talking with Sidors parent company, Ternium SA, to reach a deal for the Luxembourg-based companys 60 percent stake in the company. "We have always said that we want to bring these decisions down the best of roads, looking for an agreement, consensus," Chavez said during a televised address.[10]
Chavez dismissed a request made by Sidor's parent company, Luxembourg-based Ternium SA, for $4 billion in exchange for a 60 per cent stake in the firm. Chavez ordered Sidor nationalized earlier this month, taking sides with workers who fought for improved salaries and benefits. His government is still negotiating the price it will pay to shareholders to take over the company. Chavez says he may expropriate the company outright if the two sides fail to reach an agreement.[11] Chavez announced plans to buy a controlling stake in Sidor, as Ternium's unit is known, on April 9 after it failed to reach an agreement for a new labor contract with union workers. Venezuela is also nationalizing the local subsidiaries of three multi-national cement companies this year, in a bid to assume state control of "strategic'' parts of the economy. Chavez said April 27 he won't pay what Ternium is asking, which he said is between $3 billion and $4 billion.[6]
Ternium SA, based in Luxembourg, asked the Venezuelan government for $4 billion for the Sidor steel mill, Venezuela's largest. Chavez said he would not pay the $4 billion and that if the company doesn't make a more reasonable offer he will expropriate the company, El Universal reported Monday. In recent years, Venezuela has nationalized several sectors of its economy, including cement production, and foreign-owned petroleum companies and electricity providers.[12]
The meeting ended with an agreement to continue talks on the takeover next week, according to a company official who asked not to be named as negotiations over Venezuela's biggest steel producer were meant to be private. That eased some pressure on Ternium. At the weekend, Chavez had said Ternium was "crazy" for claiming its holdings in the Venezuelan plant are worth $4 billion and threatened to expropriate the property this week if the two sides did not quickly strike a deal.[7] In recent days, Chavez has stepped up pressure on Ternium (TX.N: Quote, Profile, Research ) to strike a deal over the value of the sprawling Sidor plant on the Orinoco river. He called the company "crazy" for asking for $4 billion for its holdings and threatened to expropriate if it did not quickly lower its demands.[8] Chavez has nationalized large swathes of the economy in the South American oil nation and has typically paid a fair price for property taken over by the government. Over the weekend he said Ternium was "crazy" for claiming its holdings in the Sidor plant are worth $4 billion. He threatened to expropriate the property if the two sides did not quickly strike a deal.[13]
Mr. Ch''vez dismissed a request by Sidor'''s parent company, Ternium, of Luxembourg, for $4 billion in exchange for a 60 percent stake in the steel maker. He ordered Sidor nationalized this month, siding with workers who fought for improved salaries and benefits.[14] Ternium, the Latin American steelmaking unit of Techint Group, dropped 5.8 percent to $33.67 at 9:55 a.m. in New York and lost as much as 9.7 percent. Venezuelan President Hugo Chavez said yesterday that Ternium should accept a "fair'' price for the nationalization of its 60 percent stake in the country's biggest maker of flat-steel products by tomorrow or face expropriation.[15] Venezuela's President Hugo Chavez speaks during his weekly broadcast 'Alo Presidente' in Chuao, Aragua state, April 27, 2008. Chavez threatened to expropriate steelmaker Ternium Sidor if the company's ownership cannot reach an agreement over its nationalization.[16] CARACAS, Venezuela - President Hugo Chavez is threatening to expropriate Venezuela's largest steelmaker because he says shareholders are demanding excessive compensation for the company's nationalization.[11] President Hugo Ch''vez is threatening to expropriate Venezuela'''s largest steel maker, Sidor, because he says shareholders are demanding excessive compensation for the company'''s nationalization.[14] CARACAS ' Lawmakers loyal to President Hugo Chavez declared Sidor ' Venezuela's largest steel maker ' a "public utility" on Tuesday, a legal prerequisite to expropriation. Chavez said earlier Tuesday that he wants a "consensus" on compensation for Sidor, shifting to a more conciliatory tone in his latest nationalization move.[17]
President Hugo Chavez on Wednesday ordered the expropriation of Venezuela's largest steel maker. His government will turn Siderurgica del Orinoco into "a socialist company," Chavez told workers gathered for a televised event at a Caracas theater.[9]
Sidor whose formal name is Siderurgica del Orinoco was privatized in 1998. It produces about 85 percent of the 5 million metric tons (5.5 million U.S. tons) of steel Venezuela turns out annually, according to the Belgium-based International Iron and Steel Institute. Chavez says that state control over key industries is essential in steering this South American country toward what he calls "21st-century socialism." Earlier this month, the president said Venezuela would nationalize cement companies including Mexicos Cemex SAB, Frances Lafarge SA and Switzerlands Holcim Ltd. The government is negotiating terms with the companies.[10] Sidor employs almost 15,000 workers and last year produced 4.3 million tonnes of liquid steel despite sporadic strikes in a drawn out labor dispute that prompted Chavez to nationalize. He announced the planned takeover earlier in April. The government is also in the process of nationalizing foreign-owned cement companies such as Mexico's Cemex (CX.N: Quote, Profile, Research ).[8]
The government seized majority control last year of joint oil ventures previously controlled by some of the world's top oil companies, along with the country's largest telecommunications and electricity companies. Chávez also announced plans earlier this month to nationalize major cement companies. His government is currently holding talks with Mexico's Cemex SAB, France's Lafarge SA and Switzerland's Holcim Ltd. Chávez has said the companies will be allowed to stay on as minority partners.[4]
April 28 (Bloomberg) -- Ternium SA fell the most since April 9, when Venezuela announced plans to nationalize the company's local unit, after the government threatened to expropriate company assets.[15] Ternium S.A. (NYSE: TX) announced today that the National Assembly of the Republic of Venezuela passed a resolution declaring that the shares of Ternium's majority-owned subsidiary Sidor, C.A., together with all of its assets, are of public and social interest. This resolution authorizes the Venezuelan government to take any action it may deem appropriate in connection with any such assets, which may include expropriation. While continuing to preserve all of its rights under contracts, investment treaties and Venezuelan and international law, Ternium is prepared to continue discussions with the Venezuelan government regarding the adequate and fair terms and conditions upon which all or a significant part of Ternium's interest in Sidor would be transferred to the government. Forward-looking statements are based on management's current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to gross domestic product, related market demand, global production capacity, tariffs, cyclicality in the industries that purchase steel products and other factors beyond Ternium's control.[18]
Venezuelan government has put t values Ternium's Siderurgica del Orinoco unit, known as Sidor, at USD 800 million. Ternium bought its stake in Sidor in 1997 for USD 1.5 billion and had asked for between USD 3.2 billion and USD 4.8 billion.[5] The government has said it values Ternium's Siderurgica del Orinoco unit, known as Sidor, at $800 million. Chavez said he's prepared to occupy the company's facilities on April 29 should the company and the government fail to reach an agreement during a final meeting tomorrow.[15]
Mining and Basic Industries Minister Rodolfo Sanz has said that Sidor is worth $800 million. He said the government has proposed that Ternium, which owns 60 percent of Sidor, keep a 10 percent stake.[6] Officials had recently floated the possibility of buying a 40 percent share from Ternium to give the government a majority stake, while allowing Ternium and Sidor's employees to each keep 20 percent of the venture. Sanz said that Ternium wants between US$3.2 billion (euro2 billion) and US$4.8 billion (euro3 billion) in exchange for its full 60 percent share.[3] Earlier this week, Chavez accused Ternium of demanding excessive payment and he threatened to expropriate the company outright if an agreement was not reached by Monday. Ternium, which is controlled by Argentine-Italian conglomerate Techint Group, has asked for roughly US$4 billion (2.6 billion) in exchange for its 60 percent share, according to Chavez.[10]
Apparently Chavez estimates the Ternium share in Sidor in 800 million U.S. dollars. Chávez ordered the nationalization of Sidor earlier this month, after months of tense negotiations between the firm and workers, who are demanding better salaries and benefits.[4] According to Venezuelan authorities, Chvez's government is prepared to pay USD 800 million for 60 percent of Sidor shares.[19]
While the Venezuelan government was negotiating with Argentinean steelmaker Ternium Sidor to set the sum it would pay to nationalize the company, the National Assembly moved to declare the steelmaker a public utility.[19] Sidor is 60% owned by Ternium, 20% by the Venezuelan government and another 20% by current and ex workers.[5] Ternium currently owns 60 percent of Sidor, while the Venezuelan government holds 20 percent.[3] The Venezuelan government holds 20 percent of Sidor and the rest is held by current and former employees.[10]
The National Assembly pointed out that Sidor productive activities have been affected by the labor conflicts caused by the collective bargaining agreement currently under discussion. Despite the Venezuelan government's participation in such negotiations, a harmonious environment has not been created to solve the conflict yet. It is "the state's duty to guarantee the continuity of productive processes of the national industry and ensure their interconnection to strengthen strategic areas."[19] The move -a prerequisite for expropriation- also included declaring Sidor shares as public utility. The lawmakers loyal to President Hugo Chvez stated that their move was also aimed at advocating the workers', retired people's, and pensioners' rights. Regarding these aspects, in one of the decree points, the Venezuelan Parliament argued that the move met "the state's duty, which is to promote the strengthening of the industry and activities favoring endogenous development. This creates and protects sources of employment with an additional high national value." The decree added that Sidor was one of the country's largest conglomerates, stressing that its activities were very important to foster industrial development, as the steelmaker transforms iron into steel to provide food, construction, and automobile sectors with products.[19] CARACAS, Venezuela, April 28 (UPI) -- Venezuelan President Hugo Chavez has threatened to expropriate a foreign steelmaker for making what he considers an excessive compensation demand.[12]
Venezuelan President Mr Hugo Chvez strongly recommended the workers of Venezuelan Orinoco's steelmaker leaving aside the capitalist model that has damaged the company's operations.[20] In a decree reviewed by the Venezuelan Parliament on Tuesday afternoon, steelmaker Siderrgica del Orinoco (Sidor) "was declared a social interest public utility. This company is oriented to strengthen the strategic national industrial sector transforming iron into different steel products such as plates, blocks, bars, flat plates, induction coils, wire rods, reinforcing bars, among others. It also deals with distribution and marketing, as well as the creation and protection of jobs."[19] Sidor _ whose formal name is Siderurgica del Orinoco _ was privatized in 1998. It turns out about 85 percent of the 5 million metric tons (5.5 million U.S. tons) of steel Venezuela produces annually, according to the Belgium-based International Iron and Steel Institute.[3]
Venezuela is negotiating with Ternium to take control of the company's Siderurgica del Orinoco subsidiary, the country's biggest maker of flat-steel products.[6] Venezuela is still negotiating the price it will pay to shareholders, but could expropriate the company outright if Ternium fails to reach a deal in a final meeting scheduled for Monday.[3] During the cabinet meeting Tuesday, Chvez highlighted the need to reach consensus. Last Sunday, however, he warned Sidor executives he would expropriate the plant if no accord on the company's price was reached by Tuesday.[19]
The meeting ended late Tuesday with no agreement. Another meeting was scheduled for next week. Earlier on Tuesday, President Chvez advised his negotiators to reach an agreement with Argentina's Ternium Sidor based on "consensus, and a win-win proposal." He added that "a negotiating delegation is discussing financial and economic issues and other aspects.[19]
"I'm not going to pay 4 billion dollars for that company" Chávez said on radio and television programs. "If they don't want to reach an agreement with us, I'll sign an expropriation decree.[4]
Basic Industries Mining Minister Rodolfo Sanz said on state television Saturday, the government would deduct from the $800 million outstanding labor and financial debts, including $200 million the company owes to Petroleos de Venezuela SA, or PdVSA, the state oil company. Hopes that the global credit crisis has its worst days behind it have helped push Asian stocks higher in overnight trading. [2] A top government official recently said that Terniums majority stake in the steel maker is not worth more than US$800 million (514 million).[10] The near-unanimous decision by lawmakers does not necessarily mean the steel maker will be expropriated. Chavez said earlier Tuesday that he wants a "consensus" on compensation for Sidor, shifting to a more conciliatory tone in his latest nationalization move.[10]
Venezuela is in a dispute with U.S.-based ExxonMobil over the nationalization of an oil project in which the company had a large financial stake.[1] The first casualty was the oil industry, the motor of the economy, with Venezuela sitting astride some of the greatest proven oil reserves outside of the Middle East. Multinational companies found their contracts torn up and new conditions imposed by the Venezuelan leader. Mr Harcourt-Cooze is the not the first Briton to find his assets under threat in Venezuela. In 2005, the Vestey Group, headed by Lord Vestey, saw one of its estates, Hato El Charcote, in the central Cojedes province, seized by the government.[21] ' Nigeria said it adopted a "master plan" that will require oil companies to set aside a certain portion of the fuel for domestic use or face fines and export restrictions. The new regulations will require oil companies such as Royal Dutch Sh ell and Exxon Mobil to allocate a "predetermined" amount of gas or face a penalty of $3.50 per thousand cubic feet of gas undersupplied.[17]
When Chavez nationalized several foreign-owned oil projects last year, workers took the installations during the May 1 labor celebrations, but talks with the companies carried on.[8] Last year, Chavez took control of the countrys largest telecommunications and electricity companies, as well as joint oil ventures previously run by some of the worlds largest oil firms.[10]
Mr Chavez, a close ally of the mayor of London, Ken Livingstone, has introduced "Socialism of the 21st Century". His Left-wing Marxist philosophy has therefore been offended by the idea of Mr Harcourt-Cooze exporting the cacao which he believes should be turned into gourmet chocolate by Venezuelan companies and workers' co-operatives. The investigation is a setback for Mr Harcourt-Cooze, a tall, dark, charismatic and unpredictable man, who by his own admission had been struggling to establish his own chocolate factory in Devon. It was a chaotic process that was captured by Channel 4 for the series Willie's Wonky Chocolate Factory. The programme disclosed that the secret behind his "Venezuelan Black" chocolate was his estate called El Tesoro - Treasure - in the mountains near the beach resort of Choroni. [21] Some 2,000 Sidor ex workers took over the administrative head office of Venezuelan Corporation of Guayana, a mining conglomerate, from where 200 workers were not allowed to leave. They requested the presence of Mr Rodolfo Sanz chairman of CVG who promised to discuss with them the sale of 10 percent of Sidor shares.[20] The government already owns a 20 percent stake in Sidor, with workers and retirees owning the remaining 20 percent.[6]
The vice president said the action was taken after the breakdown of talks between the company and its union workers regarding salaries and benefits. [1]
Enthusiasts of the brand include Thomasina Miers, who won BBC's MasterChef programme in 2005 and who owns the fashionable Mexican restaurant, Wahaca, in Covent Garden, London. Mr Harcourt-Cooze and his estate are under investigation amid accusations that he is not paying the appropriate prices for his cacao and is "exploiting the workers" in the socialist state that Venezuela has become under Mr Chavez's revolution. The president, in his television address, said: "The production and distribution is done from his factory in Devon, England, and this gentleman is getting rich."[21] "We're looking for an agreement, and consensus,'' Chavez said in comments broadcast by state television.[6] "We are looking for agreement, a win-win consensus," Chavez said during a televised cabinet meeting on Tuesday.[7]
The Venezuelan Congress' move came parallel to a meeting in the Vice-President's Office to set the compensation to be paid for Ternium shares. [19] Ternium shares rose 75 cents, or 2.2 percent, to $34.58 at 2:04 p.m. in New York Stock Exchange composite trading after falling 5.4 percent yesterday.[6] Profit fell 32 percent in the first quarter to 1.33 billion euros ($2.07 billion). The Miami Herald is pleased to provide this opportunity to share information, experiences and observations about what's in the news.[22]
Ternium is one of the leading steel companies in the Americas, offering a wide range of flat and long steel products. With its main operations in Mexico, Venezuela and Argentina and 21,000 employees, Ternium had in 2007 annual sales of approximately US$8 billion and annual shipments of approximately 10 million tons of finished steel products. [18] Ternium SA is controlled by Argentine Italian conglomerate Techint Group. It produces about 85% of the 5 million tonnes of steel produced annually in Venezuela.[5]
SOURCES
1. JTW News - Venezuela's Chavez Threatens Ternium Sidor Expropriation
2. RTTNews - Market Sensitive Global News, Broker Ratings, News&Analysis;, Global Markets News.
3. FOXNews.com - Venezuela's Chavez threatens to expropriate Sidor - Business And Money | Business News | Financial News
4. Mercopress
5. SteelGuru - News
6. Bloomberg.com: Latin America
7. UPDATE 1-Venezuela says aims for 'win-win' in steel takeover | Deals | Regulatory News | Reuters
8. UPDATE 2-Venezuela to take control of Ternium Sidor | Industries | Industrials, Materials & Utilities | Reuters
9. Chavez orders expropriation of Venezuela's largest steel maker | Jerusalem Post
10. Venezuelas Chavez seeks agreement with steel maker Sidor over nationalization - International Herald Tribune
11. Venezuela's Chavez threatens to expropriate steelmaker Sidor | CJBK
12. Chavez threatens to expropriate steel mill - UPI.com
13. Venezuela govt aims for 'win-win' in takeover fight | Markets | Reuters
14. Chavez Threatens to Expropriate Steel Maker - Mergers, Acquisitions, Venture Capital, Hedge Funds -- DealBook - New York Times
15. Bloomberg.com: Latin America
16. Hugo Chavez threatens Sidor expropriation
17. Around the world | Chron.com - Houston Chronicle
18. Venezuelas National Assembly Declares Sidor of Public and Social Interest
19. Daily News - eluniversal.com
20. SteelGuru - News
21. 'Willy Wonka' Willie Harcourt-Cooze faces closure threat from Hugo Chavez - Telegraph
22. International Briefing - 04/30/2008 - MiamiHerald.com
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