Business Context and Reporting Period
This Form 6-K filing by Ternium S.A. is dated May 6, 2011, and relates to a significant legal development concerning its Argentine subsidiary, Siderar S.A.I.C. The filing serves as a press release update regarding a court decision impacting dividend distribution. Ternium is a leading steel manufacturer in Latin America with principal operations in Mexico and Argentina and an annual production capacity of approximately ten million tons.
Key Financial Metrics
The filing does not provide comprehensive financial statements, revenue, profit, or cash flow data for the period ending June 30, 2011. The only specific financial figure disclosed relates to a dividend:
- Dividend Amount: USD 370 million (approved by Siderar's shareholders on April 15, 2011, but currently blocked).
- Dividend Source: Intended to be paid from results or reserves of fiscal year 2010.
Material Changes and Events
A Commercial Court in Buenos Aires, acting on a request by ANSeS (Argentina's social security administration), issued a decision revoking a prior ruling from May 2, 2011. The key changes are:
- Dividend Restriction: Siderar is prohibited from distributing dividends from results or reserves of fiscal year 2010.
- Permitted Distributions: Siderar may only distribute dividends from results or reserves corresponding to fiscal years prior to 2010.
- Immediate Impact: The dividend payment scheduled for May 11, 2011, cannot be made.
- Parent Company Impact: Ternium states this event will have no impact on the dividend proposed to its own shareholders for the meeting on June 1, 2011.
Outlook, Risks, and Contingencies
Management Action: Siderar has informed Ternium that it will file an appeal against the court decision in accordance with applicable law.
Risks and Contingencies: The filing includes standard forward-looking statement disclaimers. Risks cited include uncertainties regarding GDP, market demand, global production capacity, tariffs, and industry cyclicality. The specific contingency here is the ongoing legal battle with ANSeS regarding the 2010 dividend distribution.
Investor Verification Checklist
- Verify the status of Siderar's appeal against the Buenos Aires Commercial Court decision.
- Confirm the final outcome of the dispute with ANSeS regarding the USD 370 million dividend.
- Monitor Ternium's June 1, 2011, shareholder meeting to confirm the proposed dividend remains unchanged despite the subsidiary's blockage.
- Review subsequent filings for any updates on Siderar's liquidity or cash flow constraints resulting from the inability to distribute 2010 reserves.