Business Context and Reporting Period
This Form 6-K filing by Ternium S.A. is dated September 7, 2017. The report announces the completion of the acquisition of a 100% ownership interest in thyssenkrupp Slab International B.V. (tkSI) and its subsidiary, CSA Siderúrgica do Atlântico Ltda. (CSA), from thyssenkrupp AG. The transaction includes a 2.0 million tons per year slab supply agreement. CSA has been renamed Ternium Brasil Ltda., and tkSI has been renamed Ternium Staal B.V.
Key Financial Metrics
- Acquisition Consideration: EUR 1.4 billion (cash-free, debt-free basis) for the shares and slab supply agreement.
- Financing: A five-year syndicated term loan facility of USD 1.5 billion was entered into to finance the acquisition.
- Target Debt Repayment: Prior to closing, CSA repaid EUR 0.3 billion in financial debt with BNDES.
- Consolidation: Ternium will consolidate Ternium Staal B.V.'s balance sheet and results of operations beginning in September 2017.
The filing text does not provide specific revenue, profit, cash flow, or margin figures for the reporting period, as this is a transaction announcement rather than a periodic financial report.
Material Changes
The primary material change is the expansion of Ternium's industrial system through the acquisition of CSA. This adds state-of-the-art facilities and high-end steel slab capacity to Ternium's operations in Latin America. The company has also secured a long-term supply agreement for slabs to be delivered to thyssenkrupp's former Calvert re-rolling facility in Alabama, United States.
Outlook, Management Commentary, and Risks
Management Commentary: CEO Daniel Novegil stated the acquisition enhances differentiation and value-added capabilities in the steel production supply chain. The integration aims to increase high-end steel specialization in Mexico and Argentina. Marcelo Chara has been appointed CEO of Ternium Brasil.
Risks and Contingencies: The filing includes standard forward-looking statement disclaimers. Risks include uncertainties regarding gross domestic product, market demand, global production capacity, tariffs, and cyclicality in steel-purchasing industries.
Investor Verification Checklist
- Verify the final closing terms and any adjustments to the EUR 1.4 billion purchase price.
- Confirm the terms and interest rates of the new USD 1.5 billion syndicated term loan.
- Monitor the integration timeline for Ternium Brasil and the operational impact on the slab supply agreement.
- Review subsequent filings for the first consolidated financial results including the new assets.