Court cancels the share capital increase of ArcelorMittal Tubular Products SA Iaşi

The Court of Iaşi has ruled in favor of SIF Moldova and decided to cancel the share capital increase at ArcelorMittal Tubular Products SA Iaşi, with the decision made in the extraordinary meeting of the board of June 15th 2009, according to a notification sent to the Bucharest Stock Exchange.

The ruling of the court concerns the decision of the shareholders to increase the share capital of the Iaşi-based pipe maker of Iaşi, by 170,331,451 lei, by issuing 68,132,581 new shares, with a subscription price of 2.5 lei/share, by contribution in cash, as well as by using the newly issued shares to partially pay back the liquid and payable receivables owned by ArcelorMittal Tubular Products Holding BV, worth USD 43,360,000.

The text of the decision to increase the company"s share capital mentions that his operation is needed to improve the company"s financial state amid the current economic crisis, to increase its credibility in its relationship with its commercial partners, as well as to ensure any additional financial resources which would allow the company to complete its investment products quicker.

By the end of the subscription period, majority shareholder ArcelorMittal Tubular Products Holding BV had subscribed a number of 52,271,347 newly issued shares, which account for 76.72% of the newly issued stocks. The stocks were acquired in by a payment of 130,678,367.5 lei, which represented part of the certain, liquid and payable receivables that the majority shareholder had on the Iaşi-based company, worth a total of USD 43,360,000, representing the main total amount that ArcelorMittal Tubular Products SA Iaşi owed its majority shareholder. The amount of 130,678,367.5 lei was determined based on the leu/USD exchange rate displayed by the NBR on July 10th, 2009, which is the date when the majority subscribed the new shares.

15,861,234 newly issued shares which remained unsubscribed by shareholders during the period available for holding the preemption right were annulled. As a result, the share capital of ArcelorMittal Tubular Products SA Iaşi increased by 130,678,367.5 lei, representing the equivalent of the shares subscribed by ArcelorMittal Tubular Products Holding BV. Thus the Iaşi-based tube maker now has a share capital of 162.9 million lei.

SIF Moldova, which holds a 15.23% stake in ArcelorMittal Tubular Products SA Iaşi, appealed in court against the share capital of the company, and the Court of Iaşi admitted the lawsuit, and in November 2009, issued a ruling to cancel the decision of the shareholder"s extraordinary assembly June 15th, 2009. As part of the notification sent to the BSE on this matter, the management of ArcelorMittal Tubular Products SA Iaşi claims that it has already filed an appeal against the court"s ruling.

According to the Central Repository, on June 30, 2009, ArcelorMittal Tubular Products Holding BV Rotterdam NLD owned 81.47% of the shares of TPRO, Financial Investment Company SIF2 owned 15.23%, and various other shareholders held 3.3% of the shares.

ArcelorMittal Tubular Products SA Iaşi manufactures longitudinal welded pipelines, cold-cast profiles and railings, using hot- and cold-rolled tapes made from various types of steel. The Iaşi-based company ended the first semester of 2009 with a net turnover of 53,561,213 lei, almost two thirds lower YOY. At the end of June 2009, the Iaşi based pipe and tubing maker reported had 24,743,077 lei in losses, which the management of the company blamed on the global economic crisis and on difficult market conditions.

Steel giant "LNM Holdings" ("Mittal Steel Holdings") acquired the Romanian pipe maker in 2003. Apart from the pipe and tube maker of Iaşi, other companies that ArcelorMittal owns in Romania include the metallurgic plant ArcelorMittal Galaţi, ArcelorMittal Hunedoara and ArcelorMittal Tubular Products Roman, the local branch of ArcelorMittal Construction and port operator Romportmet Galaţi.