Business Context and Reporting Period
This Form 6-K filing by Ternium S.A. is dated July 19, 2016. The report serves to inform the SEC of a press release regarding the completion of a capital increase process for Usinas Siderúrgicas de Minas Gerais (Usiminas), a Brazilian steel company in which Ternium participates in the control group.
Key Financial Metrics and Transaction Details
The filing details a specific equity transaction rather than providing full-period financial statements (revenue, profit, or cash flow).
- Usiminas Capital Increase: Homologated issuance of 200 million ordinary shares at BRL 5.0 per share, totaling BRL 1 billion.
- Ternium Group Subscription (Ordinary Shares): Ternium and subsidiaries (Siderar, Prosid) subscribed to 76.4 million ordinary shares for BRL 382.2 million (approx. USD 110.9 million).
- Ternium Group Subscription (Preferred Shares): Previously subscribed to 8.5 million preferred shares on April 20, 2016, for BRL 10.9 million (approx. USD 3.1 million).
- Post-Transaction Ownership: Ternium and subsidiaries now own 242.6 million ordinary shares and 8.5 million preferred shares, representing 20.5% of Usiminas' total capital.
- T/T Group Ownership: The broader T/T Group (including Tenaris S.A.'s subsidiary Confab) owns 39.6% of Usiminas' ordinary shares and 1.8% of preferred shares.
Material Changes
The primary material change is the formal homologation of Usiminas' capital increase and the resulting increase in Ternium's equity stake in Usiminas. The filing does not provide comparative financial data for Ternium's own operating results versus prior periods.
Outlook, Risks, and Management Commentary
The filing includes standard forward-looking statements cautioning that actual results may differ due to various risks. Identified risks include:
- Uncertainties regarding gross domestic product and market demand.
- Global production capacity fluctuations.
- Tariff changes.
- Cyclicality in industries purchasing steel products (construction, automotive, energy, etc.).
Ternium is described as a leading Latin American steel producer with an annual capacity of approximately 11.0 million tons of finished steel products.
Investor Verification Checklist
- Verify the final ownership percentage of Ternium and the T/T Group in Usiminas post-capital increase.
- Confirm the exchange rate used for the BRL to USD conversion (approx. USD 110.9 million for BRL 382.2 million) to assess currency impact.
- Review Usiminas' subsequent financial performance to gauge the impact of the capital injection.
- Monitor regulatory filings for any further changes in the T/T Group's stake in Usiminas.