Ternium S.A. Form 6-K Summary
Business Context and Reporting Period
This Form 6-K filing, dated April 28, 2020, serves as a notice for the Annual and Extraordinary General Meetings of Shareholders for Ternium S.A., originally scheduled for April 2020 but postponed to June 5, 2020, due to the COVID-19 pandemic. The filing covers the fiscal year ended December 31, 2019, and includes the 2019 Consolidated Management Report, financial statements, and proposed amendments to the Articles of Association.
Key Financial Metrics and Capital Structure
The filing text does not provide specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity for the 2019 period; these figures are contained in the referenced 2019 Consolidated Management Report available on the company website. However, the filing details the following capital structure metrics:
- Issued Share Capital: USD 2,004,743,442 (2,004,743,442 shares with a par value of USD 1.00).
- Treasury Shares: 41,666,666 shares held by the Company (voting rights suspended).
- Authorized Share Capital: Proposed renewal of USD 3,500,000,000 (3,500,000,000 shares).
- Legal Reserve: The filing notes the legal reserve already equals 10% of subscribed capital, satisfying Luxembourg legal requirements.
Material Changes and Dividend Policy
A significant material change regarding shareholder returns is the Board of Directors' decision to withdraw its previously announced annual dividend proposal for fiscal year 2019. Citing uncertainty regarding the recession caused by the COVID-19 pandemic and its impact on operations and cash flows, the Board proposes that no dividend be paid for the year ended December 31, 2019. Instead, the loss shown in the annual accounts for 2019 will be absorbed by the Company's retained earnings account.
Guidance, Outlook, and Governance Proposals
Outlook and Risks: Management highlights the uncertainty surrounding the extent and timing of the COVID-19 pandemic's impact on the steel industry, which influenced the decision to withhold dividends and postpone the shareholder meeting. The Board emphasizes the need for flexibility to react quickly to strategic proposals and secure financing.
Governance Proposals:
- Board Composition: Proposal to increase the Board of Directors from eight to nine members. This includes the re-election of eight current directors and the appointment of Mrs. Gioia Ghezzi as a new member.
- Director Compensation: Proposal to set 2020 compensation at USD 100,000 per director, with an additional USD 250,000 for the Chairman. Audit Committee members would receive an additional USD 45,000, and the Audit Committee Chair an additional USD 10,000.
- Auditor Appointment: Recommendation to appoint PricewaterhouseCoopers as independent auditors for 2020, with fees capped in eight currencies (totaling approximately USD 175,206 in US Dollars).
- Share Capital Authorization: Proposal to renew the authorized share capital for five years and grant the Board authority to waive pre-emptive subscription rights for share issuances related to acquisitions, non-cash contributions, convertible instruments, and employee compensation plans (up to 1.5% of issued capital).
Investor Verification Checklist
- Verify the specific 2019 revenue, net income, and cash flow figures in the 2019 Consolidated Management Report, as they are not detailed in this filing text.
- Confirm the final vote on the cancellation of the 2019 dividend and the absorption of the 2019 loss by retained earnings.
- Review the impact of the proposed waiver of pre-emptive subscription rights on existing shareholder dilution.
- Check the updated Board composition and the specific qualifications of the new director, Mrs. Gioia Ghezzi.
- Monitor the company's liquidity position given the decision to retain cash rather than distribute dividends amidst the pandemic.