SIF Moldova Asks ArcelorMittal Tubular Products Directors To Account for Financial Results

The Board of Directors of ArcelorMittal Tubular Products SA - Iasi (RASDAQ:TPRO) has called an Ordinary General Meeting of Shareholders for 11 August upon the formal request made by financial investment firm SIF Moldova SA. The agenda includes a presentation of and discussion on the management reports, the contracts, the economic - financial status and the near-future outlook of the Iasi-based pipe factory.

The shareholders will also discuss the action plan contemplated for revitalizing the company, as per the request made by SIF Moldova. The agenda further includes a review of the management"s performance and a vote on SIF Moldova"s motion to initiate legal action against the directors of ArcelorMittal Tubular Products SA, the executive management and the financial auditor, as per the applicable legal framework.

ArcelorMittal Tubular Products SA - Iasi concluded the first quarter of this year with a turnover of 27,103,978 RON, significantly down from the corresponding period of 2008. The pipe factory also reported Q1 losses of 30,059,638 RON amid revenues of 42,926,754 RON and expenses of 72,986,392 RON. In the first three months of 2008, the pipe factory had achieved a profit of 6,277,696 RON. However, the payroll surged two-fold to 10,650,588 RON in the first quarter of 2009, thus driving overall expenses well above revenues.

The explanation is that the factory started a voluntary layoff scheme at the beginning of the year to stimulate 114 employees to leave. Each of them received severance between 20,000 and 25,000 RON, depending on their salary in the month prior to the termination of the employment contract. Further on, the laid-off employees will receive monthly severance equal to their gross salary in the last month prior to the termination of the contract for a period between 6 months and 2 years, depending on the length of service with the company, minus the mandatory contributions to State social security funds. Following the voluntary layoff scheme, the factory current has only 521 employees left, most of whom are allocated to production.

According to the latest information, dated 31 December 2008, ArcelorMittal Tubular Products Holding BV holds 81.47% in the Iasi-based pipe factory, followed by SIF Moldova with 15.31% and unnamed shareholders with 3.22%. However, the Extraordinary General Meeting of Shareholders convened in June and decided to increase the company"s capital by 170,331,451 RON by issuing 68,132,581 new shares with a face value of 2.5 RON.

It was also decided that existing shareholders would have pre-emptive rights to the new shares. The deadline for the exercise of such pre-emptive rights was set for 5 July. The capital increase will be performed through a capital injection and a swap of some of the newly issued shares against due debts to ArcelorMittal Tubular Products Holding BV (AMTPH). The current value of the debts to AMTPH stands at 43,360,000 USD plus penalties.

The swap between new shares and debts to AMTPH will be based on the exchange rate announced by the National Bank of Romania for the date when the new shares are subscribed. If the shareholders decide to swap new shares for the entire value of the debt, AMTPH could secure approximately 76% of the new shares, considering the current RON/USD exchange rate.

The pipe factory in Iasi was taken over by the world steel giant LNM Holdings (Mittal Steel Holdings) in 2003. In December 2007, the State Asset Recovery Authority (AVAS) sold an additional 17.49% in the company to the majority shareholder. In February 2008, Mittal Steel Holdings AG transferred 81.46% in the factory to ArcelorMittal Tubular Products BV, registered in Holland. In December 2008, the majority shareholder decided to takeover some of the factory"s debts to World Steel Data BV and ArcelorMittal Holdings AG (both members of the ArcelorMittal Group) in view of swapping such debts for shares. The value of the debts in question was 127,422,032 RON.

ArcelorMittal Tubular Products SA - Iasi produces longitudinal welded pipes, cold-drawn profiles and flat facades. The factory is equipped with hot stretched reduction mills, cold forming tube mills annealing furnaces for normalizing, coating lines, and machines for threading. Besides the pipe factory in Iasi, ArcelorMittal"s operations in Romania include the ArcelorMittal steel works in Galati, the ArcelorMittal steel works in Hunedoara, Arcelor Mittal Tubular Products - Roman, the Romanian subsidiary of ArcelorMittal Construction and the port operator Romportmet - Galati.