Brazilian Court Orders Ternium to Pay an Indemnification in Connection with its Acquisition of a Participation in Usiminas in 2012
Ternium (NYSE:TX) has been ordered by the Brazilian Superior Court of Justice (SCJ) to pay Companhia Siderúrgica Nacional (CSN) an indemnification linked to its 2012 acquisition of a stake in Usiminas. The case, which alleges that Ternium’s subsidiaries failed to launch a required tag-along tender offer, saw initial rulings in favor of Ternium. However, the SCJ reversed its decision on June 18, 2024, awarding CSN an indemnification that could total up to BRL3.2 billion (approx. $0.6 billion) from Ternium Investments and BRL1.1 billion (approx. $0.2 billion) from Ternium Argentina. Despite these findings, Ternium maintains that the claims lack merit and plans to appeal the decision.
- None.
- Ternium is ordered to pay an indemnification totaling up to $0.8 billion.
- Initial favorable rulings were overturned by the SCJ.
- A significant financial liability may impact Ternium's financial health.
Insights
The Brazilian Superior Court of Justice's decision to order Ternium subsidiaries to pay an indemnification is significant for several reasons. The case highlights the complexities involved in acquisitions and the corresponding legal responsibilities under Brazilian law. Notably, the court's decision to reverse its earlier ruling emphasizes the dynamic nature of judicial decisions, especially in financial and corporate law. The indemnification amounts, potentially reaching
This decision could set a precedent affecting how acquisitions are negotiated and executed in Brazil, signaling to companies the critical importance of compliance with local tender offer requirements. From a legal perspective, Ternium's intention to file further motions and appeals is standard practice in such high-stakes litigation. Investors should be cognizant of the potential for prolonged legal battles and their associated costs. While Ternium believes the current ruling to be contrary to law, the effectiveness of its future appeals remains uncertain.
Financially, the indemnification ordered by the court introduces significant liabilities to Ternium's balance sheet. The potential aggregate sum of
Moreover, protracted litigation and the uncertainty surrounding the final outcome could lead to volatility in the stock. It's also worth noting that this ruling may prompt other investors or stakeholders to question the company's past acquisition practices, further affecting market perception. The company's assertion that the claims are groundless and its intention to appeal, while reassuring, do not eliminate the risk posed by this liability. Investors should closely monitor Ternium's financial statements and any updates on this legal matter for further implications on the company's financial health and stock performance.
LUXEMBOURG / ACCESSWIRE / June 18, 2024 / Ternium S.A. (NYSE:TX) announced today that the Brazilian Superior Court of Justice (SCJ) resolved that Ternium's subsidiaries Ternium Investments and Ternium Argentina, and Tenaris's subsidiary Confab, all of which compose the T/T Group under the Usiminas shareholders agreement, should pay Companhia Siderúrgica Nacional, or CSN, an indemnification in connection with the acquisition by the T/T Group of a participation in Usiminas in January 2012.
CSN and various entities affiliated with CSN had filed a lawsuit in Brazil against the T/T Group, alleging that, under applicable Brazilian laws and rules, the acquirers were required to launch a tag-along tender offer to all non-controlling holders of Usiminas ordinary shares for a price per share equal to
On September 23, 2013, the first instance court dismissed the CSN lawsuit, and on February 8, 2017, the court of appeals upheld the first instance court decision. On March 7, 2023, the SCJ rejected CSN's appeal by majority vote. The composition of the SCJ panel in charge of the case subsequently changed and CSN made several submissions in connection with the SCJ decision, including a motion for clarification with the SCJ that challenged the merits of its earlier decision.
At today's session, the SCJ completed its voting on CSN's motion for clarification and reversed, by majority vote, its March 7, 2023 decision and granted CSN an indemnification, with CSN being allowed to retain ownership of the Usiminas ordinary shares it currently owns. Depending on how the indemnification is calculated by other courts, and assuming monetary adjustment and interest through May 31, 2024, the potential aggregate indemnification payable by Ternium Investments and Ternium Argentina could reach up to BRL3.2 billion (approximately
The Company continues to believe that all of CSN's claims and allegations are groundless and without merit, as confirmed by several opinions of Brazilian legal counsel, two decisions issued by the Brazilian securities regulator in February 2012 and December 2016, the first and second instance court decisions and the March 7, 2023 SCJ decision referred to above. The Company also believes that today's SCJ decision on CSN's motion for clarification is contrary to applicable substantive and procedural law. Accordingly, once the SCJ written votes are made available, Ternium Investments and Ternium Argentina will file all available motions and appeals against the SCJ decision.
Forward Looking Statements
Some of the statements contained in this press release are "forward-looking statements". Forward-looking statements are based on management's current views and assumptions and involve known and unknown risks that could cause actual results, performance or events to differ materially from those expressed or implied by those statements. These risks include but are not limited to risks arising from uncertainties as to gross domestic product, related market demand, global production capacity, tariffs, cyclicality in the industries that purchase steel products and other factors beyond Ternium's control.
About Ternium
Ternium is a leading steel producer in the Americas, providing advanced steel products to a wide range of manufacturing industries and the construction sector. We invest in low carbon emissions steelmaking technologies to support the energy transition and the mobility of the future. We also support the development of our communities, especially through educational programs in Latin America. More information about Ternium is available at www.ternium.com.
Sebastián Martí
Ternium - Investor Relations
+1 (866) 890 0443
+54 (11) 4018 8389
www.ternium.com
SOURCE: Ternium S.A.
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