SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
(RULE 14d-101)
SOLICITATION/RECOMMENDATION STATEMENT
UNDER SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
SIDERCA S.A.I.C.
(NAME OF SUBJECT COMPANY)
SIDERCA S.A.I.C.
(NAME OF PERSON FILING STATEMENT)
SIDERCA CLASS A ORDINARY SHARES,
NOMINAL VALUE ARP 1.00 PER SHARE
AND
SIDERCA AMERICAN DEPOSITARY SHARES
(EACH REPRESENTING 10 CLASS A ORDINARY SHARES)
(TITLE OF CLASS OF SECURITIES)
N/A
(CUSIP NUMBER OF CLASS A ORDINARY SHARES)
825863103
(CUSIP NUMBER OF AMERICAN DEPOSITARY SHARES)
GIOVANNI GALLO
TECHINT INC.
420 FIFTH AVENUE, 18TH FLOOR
NEW YORK, NEW YORK 10018
(212) 376-6500
(NAME, ADDRESS AND TELEPHONE NUMBERS OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF FILING PERSONS)
WITH A COPY TO:
SERGIO J. GALVIS, ESQ.
SULLIVAN & CROMWELL
125 BROAD STREET
NEW YORK, NEW YORK 10004-2498
(212) 558-4000
(NAME, ADDRESS, AND TELEPHONE NUMBERS OF PERSON AUTHORIZED
TO RECEIVE NOTICES AND COMMUNICATIONS ON BEHALF OF FILING PERSONS)
[ ] Check the box if the filing relates solely to preliminary communications
made before the commencement of a tender offer.
ITEM 1. SUBJECT COMPANY INFORMATION
The name of the subject company is Siderca S.A.I.C., a corporation
organized under the laws of the Republic of Argentina. Siderca's principal
executive offices are located at Av. Leandro N. Alem. 1067, C1001AAF Buenos
Aires, Argentina. Siderca's telephone number is (54) 11-4018-2244.
The titles of the classes of equity securities to which this statement
relates are Class A ordinary shares of Siderca, nominal value ARP1.00 (one
Argentine peso) per share (the "Siderca shares"), and American Depositary
Shares, or ADSs, each representing 10 Class A ordinary shares (the "Siderca
ADSs"). The ADSs are evidenced by American Depositary Receipts. As of
October 18, 2002, a total of 1,000,000,000 Shares were issued and
outstanding. As of October 18, 2002, a total of 54,581,040 Siderca shares
were registered in the name of the depositary for Siderca's ADR program.
ITEM 2. IDENTITY AND BACKGROUND OF FILING PERSON.
The name, business address and business telephone number of Siderca, as the
subject company and the person filing this statement, are set forth in Item
1 above.
This Schedule relates to an exchange offer (the "Exchange Offer") by
Tenaris S.A., a corporation organized under the laws of the Grand Duchy of
Luxembourg, under which Tenaris is offering to exchange (1) one Tenaris
ordinary share, par value USD1.00 per share, for every 1.0933 Siderca
shares tendered; (2) one Tenaris ADS (representing 10 Tenaris ordinary
shares) for every 1.0933 Siderca ADSs tendered (the exchange ratios
referred to in (1) and (2) above are collectively referred to herein as the
"Siderca Exchange Ratio"); (3) one Tenaris ordinary share for every 0.9452
common shares, having no par value, of Tubos de Acero de Mexico S.A.
("Tamsa"), a corporation organized under the laws of the United Mexican
States, tendered; (4) one Tenaris ADS (representing 10 Tenaris ordinary
shares) for every 1.8904 Tamsa ADSs (each representing 5 Ordinary shares of
Tamsa) tendered; and (5) one Tenaris ordinary share for every 12.0267
ordinary shares, nominal value E0.16 per share, of Dalmine S.p.A., a
corporation organized under the laws of the Republic of Italy, tendered,
upon the terms and subject to the conditions set forth in the prospectus
dated November 8, 2002 (the "Prospectus") and in the related forms of
acceptance and ADS letters of transmittal. The Exchange Offer is also
described in an Exchange Offer Statement on Schedule TO filed by Tenaris
with the United States Securities and Exchange Commission (the "SEC") on
November 12, 2002 (as amended and supplemented from time to time, the
"Schedule TO"). The Exchange Offer is open to all holders of Siderca ADSs
and to all holders of Siderca shares, as described in the Prospectus.
As set forth in the Schedule TO, Tenaris will not be required to accept for
exchange or exchange any tendered Siderca shares or ADSs and may terminate
the Exchange Offer with respect to Siderca shares and ADSs, if, at the
expiration date of the exchange offer, 8.83% or less of Siderca's
outstanding shares (in the form of shares or ADSs) have been validly
tendered and not withdrawn or 28.16% or less of Tamsa's outstanding shares
(in the form of shares or ADSs) have been validly tendered and not
withdrawn.
In addition, Tenaris will not be required to accept for exchange or
exchange any tendered Siderca shares or ADSs and may terminate the Exchange
Offer with respect to Siderca shares and ADSs if at any time prior to the
expiration date of the Exchange Offer or, in the case of conditions
dependent upon the receipt and maintenance in full effect of a required
regulatory approval, at any time prior to the date of the actual exchange,
any of the following conditions exists:
- any provision of applicable law or regulation or any judgment, injunction
or decree prohibits the consummation of the Exchange Offer in whole or in
part;
- any material required approval, including any required regulatory license
and any definitive listing approval, has not been obtained or has been
withdrawn or rescinded, or any required approval has not remained in full
force and effect or any governmental authority has:
1
- imposed, in connection with granting any required approval, any
condition, which, when taken together with all other conditions imposed
by governmental authorities in connection with the required approvals,
would reasonably be expected to have, individually or in the aggregate, a
material adverse effect on Tenaris's operations (including Siderca,
Tamsa, Dalmine and their respective subsidiaries) after the exchange
date; or
- required the taking of any action after the settlement date which itself
requires prior approvals or actions by a governmental authority if that
action or approval could not be taken or obtained and the failure to take
those actions or obtain those approvals would reasonably be expected,
individually or in the aggregate, to have a material adverse effect on
Tenaris's operations (including the operations of Siderca, Tamsa, Dalmine
and their respective subsidiaries); or
- since the date of the Prospectus any event, occurrence, development or
state of circumstances or facts has occurred that has had or would
reasonably be expected to have, individually or in the aggregate, a
material adverse effect on Tenaris or any of Siderca, Tamsa or Dalmine;
which, in Tenaris's reasonable judgment, makes it inadvisable to proceed
with such acceptance for exchange or exchange.
Furthermore, the consummation of the Exchange Offer with respect to Siderca
shares and ADSs is conditioned on the consummation of the Exchange Offer
with respect to Tamsa shares and ADSs.
Tenaris has stated in the Prospectus that it may waive any of the above
conditions in whole or in part in its discretion. The Prospectus also sets
forth the terms and conditions under which Tenaris may amend or terminate
the Exchange Offer or extend the Exchange Offer period.
Tenaris's registered office is located at 23 Avenue Monterey, L-2086,
Luxembourg.
ITEM 3. PAST CONTACTS, TRANSACTIONS, NEGOTIATIONS AND AGREEMENTS.
Except as described herein (including the Exhibits hereto) or incorporated
herein by reference, to the knowledge of Siderca, as of the date of this
Schedule there exists no material agreement, arrangement or understanding
or actual or potential material conflict of interest between Siderca or its
affiliates and (1) Siderca's executive officers, directors or affiliates or
(2) Tenaris or its executive officers, directors or affiliates.
Tenaris controls Siderca. As of October 18, 2002, Tenaris, directly and
through its subsidiaries, owned a 71.17% interest in Siderca (51.96%
directly and 19.21% through Tenaris's wholly-owned subsidiary, Invertub
S.A.). As of October 18, 2002, San Faustin N.A. owned 100% of Tenaris
directly or through its wholly-owned subsidiary, Sidertubes S.A. San
Faustin is controlled by Roberto Rocca, who thereby indirectly controls
Siderca. Accordingly, beneficial ownership of San Faustin's interest is
attributed to Roberto Rocca under U.S. federal securities law.
For the nine-month transition period ended December 31, 2001, the aggregate
compensation of all Siderca's directors, alternate directors, members of
the supervisory council and executive officers paid or accrued during the
period for services in all capacities was approximately ARP6.1 million.
The total number of shares owned by Siderca's directors, alternate
directors, members and alternate members of the supervisory council and
executive officers as of October 18, 2002 was 41,840, not including shares
directly or beneficially owned by Roberto Rocca, president of Siderca's
board of directors and chairman of San Faustin.
The other officers, directors and members of the supervisory council that
hold ordinary shares of Siderca, in each case in an amount less than one
percent of our total outstanding ordinary shares are Federico Alejandro
Pena, Fernando Ricardo Mantilla, Alberto Francisco Pertini, Juan Jose
Valdez Follino, Mario Hugo Azulay and Roberto Anibal Fernandez Moujan.
Paolo Rocca, chief executive officer and a director of Siderca, is the
chief executive officer and a director of Tenaris. Paolo Rocca is the son
of Roberto Rocca. As of October 18, 2002, Carlos
2
Condorelli, chief financial officer of Tenaris, owns 4,725 Siderca shares
and 887 Siderca ADSs, and Fernando Mantilla, a director of both Siderca and
Tenaris and secretary of San Faustin, owns 8,800 Siderca shares. Fernando
Mantilla is also the first cousin of Horacio de las Carreras, secretary to
Siderca's board of directors. In addition, Enrico Bonatti, a director of
Tenaris, is the first cousin of Paolo Rocca and the brother of Roberto
Bonatti, a director of Siderca.
In addition, nine of Siderca's thirteen directors are employed by
affiliates of Tenaris.
CORPORATE REORGANIZATION TRANSACTIONS
Tenaris and certain of its affiliates have entered into the transactions
summarized below as part of the implementation of Tenaris's corporate
reorganization and in preparation for the Exchange Offer.
On November 22, 2001, Sidertubes acquired from a wholly-owned subsidiary of
San Faustin a 57.00% interest in Santa Maria S.A.I.F. (an Argentine
corporation that held, among other assets, 19.21% of Siderca) for USD152.3
million, which was the historical book value of those assets.
On December 17, 2001, Tenaris was organized as a Luxembourg corporation,
with Sidertubes holding a 99.68% interest and San Faustin holding a 0.32%
interest.
On December 21, 2001, Sidertubes transferred its entire interest in Santa
Maria to Tenaris. Pursuant to an agreement between Sidertubes and Tenaris,
dated May 23, 2002, the transfer was treated as a credit on account of
future capital contributions in the amount of USD152.3 million. The parties
also agreed that the amount of the credit would be adjusted as necessary in
the future based on the value of Santa Maria's assets related to the steel
pipe business.
On December 31, 2001, Santa Maria approved a spin-off of its assets related
to the steel pipe business (including its interest in Siderca) to Invertub,
a newly-formed Argentine corporation. The spin-off was completed on July
10, 2002. In connection with the spin-off, Tenaris received a 99.9%
interest in Invertub concurrently with the cancellation of Tenaris's shares
in Santa Maria, while the other shareholders of Santa Maria retained a 100%
interest in Santa Maria.
As of December 31, 2001, Sidertubes held directly or indirectly all of the
companies, representative offices and other assets comprising the Techint
commercial network, an extensive commercial network with operations
worldwide providing sales and marketing services to the Techint group,
which is an international group of companies with operations in the steel,
energy, infrastructure, engineering, construction and public service
sectors over which San Faustin exercises either control or significant
influence. On April 24, 2002, Sidertubes acquired from Santa Maria for
USD32,774 a 100% interest in Abeluz S.A., a Uruguayan corporation with no
significant assets or liabilities, which will be renamed Tenaris Global
Services S.A. after settlement of the exchange offer. On June 18, 2002,
Sidertubes approved the separation of Tenaris Global Services from the rest
of the assets comprising the Techint commercial network. Accordingly,
Sidertubes caused its direct or indirect subsidiaries in the Techint
commercial network to:
- transfer to Abeluz all those companies and other assets that provide
sales and marketing services primarily to Tenaris's manufacturing
subsidiaries, including Siderca, Tamsa and Dalmine and their respective
subsidiaries (the "Tenaris companies") for the aggregate amount of USD
19.4 million, and
- enter into contracts that will assign upon completion of the Exchange
Offer to Abeluz or its subsidiaries those export agency agreements
entered into between the Tenaris companies and those Techint group
companies that were not reorganized as subsidiaries of Abeluz.
On June 18, 2002, after the consummation of the transactions describe
above, Sidertubes sold all of its assets not relating to the steel pipe
business, as well as all of its liabilities, to an affiliate of Sidertubes
for USD320.8 million.
3
On September 13, 2002, Tenaris entered into a corporate reorganization
agreement with Sidertubes pursuant to which Sidertubes agreed:
- to contribute all of its assets and liabilities (consisting primarily of
Sidertubes' remaining 52% interest in Siderca, a 6.9% interest in Tamsa,
a 0.2% interest in Dalmine, a 100% interest in Tenaris Global Services,
its interest in Tenaris and the credit against Tenaris associated with
the transfer of Invertub to Tenaris) to Tenaris in exchange for
710,747,090 shares newly issued by Tenaris;
- upon settlement of the Exchange Offer, to satisfy Tenaris's obligation to
deliver shares of Tenaris pursuant to the exchange offer by delivering to
the tendering shareholders of Siderca, Tamsa and Dalmine whose shares in
those companies were accepted for exchange, shares of Tenaris received by
Sidertubes in connection with the contribution made by it to Tenaris; and
- following Sidertubes' delivery of shares of Tenaris to the tendering
shareholders, to make a second capital contribution to Tenaris of all of
Sidertubes' assets and liabilities (consisting of any remaining shares in
Tenaris and a credit arising from Sidertubes' delivery of shares of
Tenaris to tendering shareholders upon settlement of the Exchange Offer)
in exchange for 710,747,090 shares newly issued by Tenaris.
Under the corporate reorganization agreement, the per-share value of the
assets and liabilities contributed to Tenaris as described above is to be
allocated USD1.00 to share capital and USD0.10 to legal reserve, with the
balance being allocated to share premium. Sidertubes made the first
contribution described above on October 18, 2002. The value of this
contribution (USD1,275 million) was allocated as follows:
- USD710.7 million to share capital;
- USD71.1 million to legal reserve;
- USD127.5 million to a freely-distributable issuance premium; and
- the balance (USD365.7 million) to the issuance premium distributable only
in accordance with Luxembourg laws and regulations applicable to capital
reductions.
Sidertubes will make the second contribution described above as soon as
practicable after settlement of the Exchange Offer.
MARKETING AGREEMENTS
Each of Siderca and certain of its affiliates and subsidiaries have entered
into an export agency agreement with a company belonging to the Techint
commercial network. In addition, some of the Tenaris companies have entered
into agreements with each other in respect of sales in their home
countries. The purpose of these arrangements is to maximize the commercial
penetration of the Tenaris companies in their export markets and take
maximum advantage of each company's manufacturing and distribution
capabilities in its respective domestic market. A description of these
marketing agreements follows.
- Business Opportunities Agreement. This agreement governs the creation
and activities of organized joint business units. These units combine in
single management structures planning and marketing activities that will
focus on specific product lines, client types and territorial coverage
(global, regional and local). Siderca, Tamsa and Dalmine finalized this
joint policy with the signing of the "Business Opportunities Agreement"
on March 30, 2001.
- Siderca, Tamsa and Dalmine export agency agreements. Pursuant to these
agreements, restated as of September 27, 2000, September 29, 2000 and
October 4, 2000, respectively, each of Siderca, Tamsa and Dalmine has
appointed a Techint group company as its non-exclusive agent for the sale
of all of its products in all countries except Argentina, Mexico and
Italy and, in the case of Dalmine, excluding also the other member
countries of the European Union ("EU") and certain
4
other countries. The respective Techint group companies are entitled to a
commission equal to 3% of the FOB value of their sales of Siderca's,
Tamsa's and Dalmine's products, and to be reimbursed by Siderca, Tamsa
and Dalmine, as the case may be, for a portion of the total general
expenses incurred by such companies and for special sales costs.
Siderca's and Tamsa's agreements expire on September 30, 2003, and
Dalmine's on October 1, 2003, and all of them are automatically renewable
for successive three-year terms unless either of the respective parties
notifies the other in advance of its intention not to renew the
agreement.
- NKKTubes export agency agreement. Pursuant to this agreement, dated May
24, 2000, NKKTubes has appointed a Techint commercial network company as
its non-exclusive agent for the sale of its products in all countries
outside Japan. The Techint commercial network company will receive a
commission on its sales of NKKTubes' products in an amount to be agreed
upon on a case-by-case basis in accordance with the nature of the sales
agency transaction. The agreement has a term of fifteen years.
- Confab and Siat export agency agreements. Confab Industrial S.A.
("Confab") and Siat S.A.I.C. ("Siat") have appointed a Techint group
company as their non-exclusive agent for the sale of all of their
products in all countries except Brazil, in the case of Confab, and
Argentina, Brazil, Italy and Mexico, in the case of Siat. The Techint
group company is entitled to a commission equal to 5% of the FOB value of
its sales of Confab's and Siat's products. The agreements expire on
January 1, 2003, and September 30, 2004, and are automatically renewable
for successive one-year and three-year terms, respectively.
- Reciprocal export agency agreement between Siderca and Tamsa relating to
sales in Argentina and Mexico. Pursuant to this agreement, dated
December 23, 1993, Tamsa has granted Siderca the non-exclusive right to
market and sell Tamsa's products in Argentina, and Siderca has granted
Tamsa the non-exclusive right to market and sell Siderca's products in
Mexico. This agreement provides for Siderca and Tamsa to purchase each
others' products for resale in their domestic markets at prices which
permit them to earn the equivalent of a 7.5% commission on the actual
price charged to third party customers.
- Reciprocal export agency agreement between Siderca, Tamsa and
Dalmine. Pursuant to this agreement dated March 29, 1996, Siderca and
Tamsa have granted to Dalmine, and Dalmine has granted to Siderca and
Tamsa, the non-exclusive right to market and sell their respective
products through their respective local commercial networks. This
agreement provides that Dalmine will purchase the products of Siderca and
Tamsa, and Siderca and Tamsa will purchase the products of Dalmine, at
third-party export prices. The agreement additionally provides for
Dalmine's distributors to purchase Siderca's and Tamsa's products for
resale at prices which would earn them the equivalent of a commission on
sales varying between 3% and 15% depending on the nature of the services
rendered by Dalmine's distributors.
- Other agreements. Siderca, Tamsa and Dalmine have entered into numerous
agreements with member companies of the Techint commercial network in
various countries around the world pursuant to which one or more of them
agrees to sell, and one or more of the Techint commercial network
companies agrees to buy, seamless steel pipe products for resale under
stocking programs (and other similar programs) to oil and gas companies
or other buyers or end users which operate in their territories (as
defined in each agreement). The selling party under these agreements
generally agrees to assume any and all risks of the operation. To this
end, under specified circumstances (e.g., failure to consummate resale,
product rejection, customer delay), the selling party would be required
to repurchase the pipes sold to the reseller.
AGREEMENTS TO SHARE COSTS AND KNOW-HOW
Siderca, Tamsa and Dalmine have entered into agreements among themselves to
share costs and know-how and provide each other with technical assistance.
A description of these agreements follows.
5
- Industrial and Technical Integration and Exchange Agreement (Contrato de
Intercambio y Complementacion Industrial). Pursuant to this agreement,
dated August 1996, Siderca and Tamsa have agreed to exchange technical
and operational assistance and technology in the areas of manufacturing
and supply and in other areas affecting manufacturing operations. Fees
are payable for transfers of technology and other services provided under
the agreement.
- Assistance Contract (Contratto de Assistenza). Pursuant to this
agreement, dated March 28, 1996, Siderca agreed to provide Dalmine with
technical and managerial assistance and Dalmine agreed to pay a fixed
semi-annual fee of Italian lire 700 (E0.4 million) million in equal parts
to Siderca and another Techint Group company. Following the execution of
the Cost Contribution Agreement (discussed below), payments to Siderca
under this assistance agreement ceased as of June 30, 2000 and payments
to the Techint Group company ceased effective March 31, 2001.
- Cost Contribution Agreement. Pursuant to this agreement, dated May 11,
1999, Siderca, Tamsa and Dalmine have agreed to share the cost of various
activities whose costs and benefits can be shared among the three
companies and for which the three companies have not established special
purpose companies (in areas such as research and development, marketing
and communications, human resources management, information systems and
general management issues) in order to avoid duplicative efforts and
expenses. The agreement establishes the bases to carry out these
activities, such as guidelines for approval and execution, rules for
usage of resources and the percentage of sharing of costs among the
parties. Management of the three companies will decide on a case-by-case
basis which activities will be included as part of this agreement. The
agreement has no fixed term.
AGREEMENTS RELATING TO NKK'S TECHNOLOGY
Under the agreements relating to Siderca's purchase on May 24, 2000, of a
51% shareholding in NKKTubes K.K. ("NKKTubes"), NKK Corporation ("NKK")
agreed to license to Tenaris its manufacturing technology, patents and
trademarks for manufacturing steel (for use in the manufacturing of
seamless steel pipe) and seamless steel pipe. Under the licensing
arrangements, NKK has agreed to provide reasonable technical assistance as
necessary to enable the Tenaris companies rapidly to assimilate NKK's
technology. These licensing agreements, which have a term of fifteen years
effective August 1, 2000, were made between NKK and Tenaris Connections
A.G., a company owned in equal shares by Siderca, Tamsa and Dalmine. NKK
also agreed to license its manufacturing technology, patents and trademarks
for making premium connections to the Tenaris companies.
In February 2002, Tenaris acquired NKK's manufacturing technology, patents
and trademarks for making premium connections for USD1.9 million.
In connection with NKK and Kawasaki Steel Corporation's business
combination, effective on September 27, 2002, Siderca and NKK reached on
September 25, 2002 an agreement that amends certain provisions of the
various agreements relating to the creation and governance of the NKKTubes
joint venture. The parties are currently negotiating the terms of the
proposed termination of the licensing agreements relating to NKK's
technology and have agreed to use best efforts to complete such
negotiations promptly. While Siderca would not have access to NKK's
technology and know-how in the future, a termination of the licensing
agreements would not affect Siderca's ability to continue to use the
technology and know-how already licensed to it. In addition, a termination
of the licensing agreements would not affect the Tenaris companies' rights
to the NKK range of premium connections, which the Tenaris companies
acquired in 2002.
REORGANIZATION OF PREMIUM JOINT TECHNOLOGY AND LICENSING ACTIVITIES
In January 2000, Siderca, Tamsa and Dalmine agreed to reorganize their
premium joint technology and licensing activities under an existing special
purpose company and each of them invested approximately USD0.5 million in
the capital stock of Tenaris Connections. All of the Tenaris companies'
research, development, licensing, patent maintenance activities relating to
premium joint technologies
6
owned by, or licensed to, the Tenaris companies and the corresponding
technical information, know-how, certain trademarks, commercial names, and
licenses of the Antares, SEC and Atlas Bradford premium joint technologies
are concentrated in Tenaris Connections and its subsidiary, Tenaris
Connections B.V. Antares and SEC premium joint technologies are proprietary
to the Tenaris companies. Atlas Bradford premium joint technology was
licensed to Tenaris Connections B.V. by Grant Prideco Inc. in June 1998.
Tenaris Connections has granted sublicenses to each of Siderca, Tamsa and
Dalmine for the premium joint technologies for which it has licensing
rights. Except for certain domestic market sales, royalty payments under
these sublicenses are standardized at 6% of the net export selling price.
JOINT POLICY REGARDING ALLOCATION OF SALES ORDERS
Siderca, Tamsa and Dalmine have agreed to adopt a uniform, voluntary policy
governing the allocation of sales orders among themselves. The purpose of
this policy is to facilitate the most efficient and profitable allocation
of sales orders among themselves by taking advantage of each company's
manufacturing and distribution capabilities, while at the same time
ensuring equitable treatment of the three companies. The principal features
of this policy are as follows:
- sales orders involving products or product specifications that are
manufactured by only one of the three companies will be allocated to that
company;
- sales orders for delivery within one of the companies' respective local
markets will be allocated to that company if it manufactures the products
requested by the customer. Siderca's local market consists of Argentina,
Tamsa's local market consists of Mexico and Dalmine's local market
consists of the member countries of the EU plus Switzerland and Norway
(except sales of OCTG and line pipe products destined for the North Sea
area); and
- sales orders for delivery outside the three companies' local markets
involving products that are manufactured by more than one of them will be
allocated based on the recommendation of a central mill load coordinator,
who is appointed by mutual agreement among the three companies. This
recommendation will be based on several considerations, including the
customer's desired delivery schedule and logistical and service needs,
the optimal utilization of each company's manufacturing facilities and
the maximization of profits for the three companies. Each company will
have the right to reject a sales order allocated to it and to appeal the
allocation of that sales order to another company. Product orders subject
to allocation on this basis represented approximately 35% of the
companies' combined sales volume in the second half of 2001.
To ensure transparency under this uniform policy, all requests for
quotation received by any of the three companies or by the Techint
commercial network relating to their products will be entered by the
relevant business unit into a centralized internal bidding system, which
can be accessed by each of them. The business unit will offer the customer
a single quotation without identifying the company to whom the sales order
will be allocated (unless the customer requires otherwise). At the same
time, each of the three companies has agreed to use commercially reasonable
efforts to satisfy the requirements imposed on suppliers by their
customers, thereby qualifying themselves to make sales to those customers
on an equal basis.
REORGANIZATION OF INFORMATION TECHNOLOGY AND PROCUREMENT ACTIVITIES
Siderca, Tamsa and Dalmine have established a special purpose company to
develop an e-procurement portal and a second special purpose company to
develop new Information Technology ("IT") systems. These IT systems are
intended to integrate the commercial activities of the Tenaris companies
and enable them to offer value-added services, differentiating them from
their competitors and facilitating customer retention. Subsequently, it was
determined that additional synergies could be gained from extending the
scope and benefits of these special purpose companies to Siderar S.A.I.C.
("Siderar").
7
- E-Procurement Portal. Siderca, Tamsa, Dalmine and Siderar invested
USD9.5 million (divided into four equal shares) to develop an
e-procurement portal called Exiros, through which they have centralized
their procurement activities. It is also intended to improve the supply
of products associated with the sale of the Tenaris companies' pipes. The
portal began operating in March 2001, and is owned by Lomond Holdings
B.V., a Netherlands company, whose shares are held in equal parts by
Siderca, Tamsa, Dalmine and Siderar.
- Development of New IT Systems. Siderca, Tamsa, Dalmine and Siderar have
established a new IT company, Information Systems and Technologies N.V.,
a Netherlands company, whose shares are held by Siderca (25%), Tamsa
(25%), Dalmine (25%) and Siderar (25%). The purpose of this company will
be to develop IT systems and hardware for use by the Tenaris companies,
the Techint commercial network, Siderar and Siderurgica del Orinoco, C.A.
These systems will be used to enhance the management of the commercial
activities of the Tenaris companies and their customer service
capabilities worldwide.
SUPPLY OF NATURAL GAS
Siderca is party to contracts with Tecpetrol S.A. and Transportadora de Gas
del Norte S.A. ("TGN") relating to the supply of natural gas to Siderca's
operations.
Tecpetrol is a Techint group company engaged in oil and gas exploration and
production and has rights to various oil and gas fields in Argentina and
elsewhere in Latin America. Tecpetrol supplies natural gas to Siderca, and
has entered into an agreement with Repsol YPF S.A. pursuant to which Repsol
YPF supplies Siderca with such of Siderca's requirements as Tecpetrol
cannot meet directly. Tecpetrol charges Siderca the same price at which
Tecpetrol obtains natural gas from Repsol YPF.
TGN holds a gas transportation license in Argentina and operates two major
pipelines which connect two major gas basins, Neuquen and Noroeste-Bolivia,
to the largest consumption centers in Argentina. TGN charges Siderca a
price that is consistent with prices paid by other industrial users, and
the Argentine government regulates the general framework under which TGN
operates. The Techint group holds a significant but non-controlling
interest in TGN.
FINANCIAL AND ADMINISTRATIVE SERVICES
Santa Maria S.A.I.F., a financial services company and member of the
Techint group, provides various financial and treasury services to Siderca,
including share registration services. Siderca pays Santa Maria fees and
transaction charges at rates comparable to those that can be obtained from
third parties.
Finma S.A., a company owned by various Techint group executives, provides
administrative and legal support services to Techint group companies,
including Siderca.
SHARING OF IT SYSTEMS
Siderca and Siderar have shared the data-processing costs of their
respective information systems in Argentina since December 1995 through a
project company under the name of A.C.E. TECSIS-Tecnologia en Sistemas.
PROCUREMENT SERVICES
Siderca has contracted a Techint commercial network company to provide
services relating to its procurement of goods and materials, excluding
purchases of iron oxides, from outside of Argentina. Siderca pays a 3.0%
commission on the value of its purchases made through the Techint
commercial network.
8
PROVISION OF ENGINEERING AND LABOR SERVICES
Siderca contracts Techint group companies to provide engineering and
non-specialist manual labor services, such as cleaning, general maintenance
and light construction services. These services can usually be provided by
other Techint group companies at more competitive prices than if they were
performed by Siderca itself, and are contracted out at market rates.
FUNDACION HNOS. AGUSTIN Y ENRIQUE ROCCA
The Fundacion Hnos. Agustin y Enrique Rocca is a nonprofit foundation that
undertakes social welfare projects in areas where the Techint group
operates. The foundation is funded by member companies of the Techint
group.
ITEM 4. THE SOLICITATION OR RECOMMENDATION.
At the meeting of Siderca's board of directors on November 14, 2002, the
board of directors determined that the Exchange Offer is fair to and in the
best interests of Siderca and the holders of Siderca shares and ADSs and
issued a recommendation in accordance with Argentine law that acceptance of
the Exchange Offer should be beneficial to holders of Siderca shares and
ADSs.
Pursuant to Argentine law, directors with conflicts of interest must
abstain from discussion and voting on the Exchange Offer in the relevant
board meeting. Accordingly, these directors did not discuss or vote on the
Exchange Offer at the board meeting on November 14, 2002.
REASONS FOR THE RECOMMENDATION
In arriving at its recommendation, the board of directors considered a
number of factors, including, but not limited to the following:
- that Tenaris will be larger in size than Siderca and geographically well
diversified, with the ability to allocate production orders more
efficiently among its operating subsidiaries without potential conflicts
of interest among shareholders of Siderca, Tamsa and Dalmine;
- that the controlling shareholders of Siderca will continue to be the
controlling shareholders of Tenaris and that all shares, including those
held by the controlling shareholders, will have equal voting rights;
- that Tenaris will have, as compared to Siderca, a greater share
liquidity, a larger investor base and receive more attention from the
international investment community;
- that the valuation of publicly-traded companies over a 180-day period is
in compliance with Argentine law;
- that the value (USD70 million) attributed to the commercial network and
the other participations in non-publicly traded companies is reasonable
in light of historical information regarding sales volume and commissions
paid to the commercial network as well as the reasonable value
attributable to Metalmecanica S.A. and Metalcentro S.A.;
- that PricewaterhouseCoopers has passed upon the correctness of the market
value calculations; and
- the opinion of Credit Suisse First Boston Corporation ("Credit Suisse
First Boston"), dated November 7, 2002, that, as of the date thereof and
based upon and subject to certain considerations and assumptions, the
Siderca Exchange Ratio was fair from a financial point of view to the
holders of Siderca shares and ADSs other than Tenaris.
The full text of the written opinion of Credit Suisse First Boston, which
sets forth, among other things, the assumptions made, procedures followed,
matters considered and limitations of the review conducted by Credit Suisse
First Boston in rendering its opinion, is attached as Annex A to this
statement. Holders of Siderca shares and ADSs are encouraged to, and
should, read such opinion in
9
its entirety. Credit Suisse First Boston's opinion is for the information
of the Siderca board of directors, addresses only the fairness of the
Siderca Exchange Ratio to the holders of Siderca shares and ADSs other than
Tenaris and does not address any other aspect of the Exchange Offer or
constitute a recommendation as to whether holders of Siderca shares and
ADSs should tender their shares or ADSs pursuant to the Exchange Offer or
as to how any holder of Siderca shares and ADSs should vote or act on any
matter relating to the Exchange Offer. This summary is qualified in its
entirety by reference to the full text of the opinion.
On November 14, 2002, the Siderca board of directors filed with the
Comision Nacional de Valores (the "Argentine Securities Commission") and
the Buenos Aires Stock Exchange its opinion and recommendation with respect
to the Exchange Offer. A free English translation of such opinion and
technical recommendation is attached as Annex B.
INTENT TO TENDER
To the best of Siderca's knowledge after reasonable inquiry, all of the
officers and directors of Siderca who own Siderca shares and ADSs plan to
tender their Siderca shares and ADSs pursuant to the terms of the Exchange
Offer. The members of Siderca's supervisory council do not plan to tender
their Siderca shares (10 Siderca shares in each case) pursuant to the terms
of the Exchange Offer, as they are required by Argentine law to hold a de
minimis number of Siderca shares as long as they remain in office.
None of Siderca's affiliates that own Siderca shares or ADSs plan to tender
their Siderca shares and ADSs.
ITEM 5. PERSON/ASSETS, RETAINED, EMPLOYED, COMPENSATED OR USED.
J.P. Morgan Securities, Inc. ("JPMorgan"), the dealer manager to the
Exchange Offer and financial advisor to Tenaris, has provided from time to
time financial advisory and investment banking services to Siderca,
unrelated to the Exchange Offer, for which JPMorgan has received customary
compensation. In the ordinary course of business, JPMorgan may from time to
time effect transactions and hold positions in the securities of Siderca
and Tenaris.
Credit Suisse First Boston has been retained by Siderca to render an
opinion, which is attached as Annex A to this statement, to the Siderca
board of directors with respect to the fairness from a financial point of
view of the Siderca Exchange Ratio to the holders of Siderca shares and
ADSs other than Tenaris but did not participate in any discussions or
negotiations between Siderca and Tenaris with respect to the determination
of the Siderca Exchange Ratio.
Pursuant to the terms of Credit Suisse First Boston's engagement letter,
Siderca has agreed to pay Credit Suisse First Boston a fee, which was
conditioned upon rendering its opinion to the board of directors of
Siderca. In addition, Siderca has agreed to reimburse Credit Suisse First
Boston for all out-of-pocket expenses, including the fees and expenses of
its legal counsel and any other advisor retained by Credit Suisse First
Boston, resulting from or arising out of its engagement by Siderca and will
also indemnify Credit Suisse First Boston against certain liabilities,
including liabilities arising under the federal securities laws.
Credit Suisse First Boston and its affiliates have in the past provided,
and may in the future provide, financial and investment banking services to
Tamsa and other affiliates and the shareholder of Tenaris, for which
services Credit Suisse First Boston has received and expects to receive
compensation. In the ordinary course of its business, Credit Suisse First
Boston and its affiliates may actively trade or hold the debt and/or equity
securities of Siderca, Tamsa, Dalmine, Tenaris, the shareholder of Tenaris
and their affiliates for its own accounts, the accounts of its affiliates
and for the accounts of customers and, accordingly, may at any time hold a
long or short position in such securities. Prior to Credit Suisse First
Boston's engagement in connection with the Exchange Offer, Credit Suisse
First
10
Boston had not advised either Siderca or Tenaris on any strategic
transaction and had not managed any financing transactions for either
Siderca or Tenaris.
Except as described above, neither Siderca, nor any person acting on its
behalf, has employed, retained or compensated any person to make
solicitations or recommendations to stockholders on its behalf concerning
the Exchange Offer, except that such solicitations or recommendations may
be made by directors, officers or employees of Siderca, for which they
shall receive no additional compensation.
ITEM 6. INTEREST IN SECURITIES OF THE SUBJECT COMPANY.
Other than the transfer of Siderca shares by Sidertubes to Tenaris as
discussed in Item 3 above, no transactions in Siderca shares have been
effected during the past 60 days by Siderca or, to the knowledge of
Siderca, by any executive officer, director, affiliate or subsidiary of
Siderca.
ITEM 7. PURPOSES OF THE TRANSACTION AND PLANS OR PROPOSALS.
Except as set forth in this Schedule, Siderca is not currently undertaking
or engaged in any negotiations in response to the Exchange Offer that
relate to or would result in, one or more of the following or a combination
thereof: (1) a tender offer for or other acquisition of Siderca's
securities by Siderca, any subsidiary of Siderca or any other person; (2)
an extraordinary transaction, such as a merger, reorganization or
liquidation, involving Siderca or any subsidiary of Siderca; (3) a
purchase, sale or transfer of a material amount of assets of Siderca or any
subsidiary of Siderca; or (4) any material change in the present dividend
rate or policy, or indebtedness or capitalization of Siderca.
Except as set forth in this Schedule, there are no transactions,
resolutions of the Siderca board of directors, agreements in principle or
signed contracts that have been entered into in response to the Exchange
Offer that relate to one or more of the events referred to in the preceding
paragraph.
ITEM 8. ADDITIONAL INFORMATION.
On November 14, 2002, Siderca issued a press release announcing Siderca's
opinion and recommendation with respect to the Exchange Offer. A copy of
this press release is attached as Annex C.
ITEM 9. EXHIBITS.
+(a)(1) Prospectus mailed to investors, dated November 8, 2002
+(a)(2) Siderca Form of Acceptance (English translation)
+(a)(3) Siderca ADS Letter of Transmittal
+(a)(4) Siderca ADS Letter to be Used by Brokers, Dealers,
Commercial Banks, Trust Companies and Other Nominees to
Their Clients
+(a)(5) Siderca ADS Letter to Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees
+(a)(6) Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9
+(a)(7) Text of press release announcing commencement of the
exchange offer, dated November 11, 2002
+(a)(8) Summary newspaper advertisement, dated November 12, 2002,
published in the Wall Street Journal
*(a)(9) Opinion of Credit Suisse First Boston Corporation, dated
November 7, 2002, to the board of directors of Siderca
(included as Annex A)
(a)(10) Recommendation of Siderca's board of directors, dated
November 14, 2002 (Spanish version)
*(a)(11) Recommendation of Siderca's board of directors, dated
November 14, 2002 (English translation) (included as Annex
B)
11
*(a)(11) Press release, dated November 14, 2002, announcing that
Siderca's board of directors issued its recommendation on
the Exchange Offer (included as Annex C)
#(e)(1) Amended and Restated Export Agency Agreement, dated
September 29, 2000, between Siderca S.A.I.C. and Techint
Engineering Company B.V.
#(e)(2) Amended and Restated Export Agency Agreement, dated October
4, 2000, between Tubos de Acero de Mexico S.A. and Techint
Engineering L.L.C.
#(e)(3) Amended and Restated Export Agency Agreement, dated
September 27, 2000, between Dalmine S.p.A. and Techint
Engineering S.A.
#(e)(4) Cost Contribution Agreement, dated May 11, 1999, between
Siderca S.A.I.C., Tubos de Acero de Mexico S.A. and Dalmine
S.p.A.
#(e)(5) Shareholders' Agreement, dated May 24, 2000, between
Siderca, S.A. and NKK Corporation
#(e)(6) Investment Agreement, dated May 24, 2000, among Siderca,
S.A., NKK Corporation and NKKTUBES
#(e)(7) Steel Manufacturing Technology Transfer Agreement, dated May
24, 2000, between NKK Corporation and DST Distributors of
Steel Tubes, Ltd.
#(e)(8) Seamless Steel Pipe Manufacturing Technology and Trademark
License Agreement, dated May 24, 2000, between NKK
Corporation and DST Distributors of Steel Tubes, Ltd.
#(e)(9) NKK Premium Connections Technology and Trademark License
Agreement, dated August 1, 2000, between NKK Corporation and
DST Distributors of Steel Tubes, Ltd.
#(e)(10) Premium Connections (Antares) Technology and Trademark
License Agreement dated August 1, 2000, between NKKTUBES and
DST Distributors of Steel Tubes, Ltd. S.A.
#(e)(11) NKK--Premium Connections Technology and Trademark License
Agreement, dated August 1, 2000, between NKK Corporation and
DST Distributors of Steel Tubes, Ltd.
#(e)(12) NKK--Premium Connections Technology and Trademark Sublicense
Agreement, dated October 2, 2000, between DST-Connection
Systems BV and Siderca S.A.I.C. S.A.
#(e)(13) NKK--Premium Connections Technology and Trademark Sublicense
Agreement, dated October 2, 2000, between DST-Connection
Systems BV and Tubos de Acero de Mexico, S.A.
#(e)(14) NKK--Premium Connections Technology and Trademark Sublicense
Agreement, dated October 2, 2000, between DST-Connection
Systems BV and Algoma Seamless Tubulars
#(e)(15) NKK--Premium Connections Technology and Trademark Sublicense
Agreement, dated October 9, 2000, between DST-Connection
Systems BV and DST Distributors of SteelTubes, Ltd.
#(e)(16) Agreement relating to the contribution of the shares of the
Argentine company Santa Maria S.A.I.F., dated May 23, 2002,
between Sidertubes S.A. and Tenaris Holding S.A. (later
renamed Tenaris S.A.)
#(e)(17) Excerpts from deed relating to spin-off of Santa Maria
S.A.I.F.'s assets to Invertub S.A., dated July 10, 2002
(English translation)
#(e)(18) Assignment Agreement, dated October 15, 2002, between
Techint Engineering Company B.V. and Tenaris Global Services
B.V. relating to the assignment of export agency agreements
#(e)(19) Assignment Agreement, dated October 15, 2002, between
Techint Engineering LLC and Tenaris Global Services LLC
relating to the assignment of export agency agreements
12
#(e)(20) Assignment Agreement, dated October 15, 2002, between
Techint Engineering Company S.A. and Tenaris Global Services
S.A. relating to the assignment of export agency agreements
#(e)(21) Corporate Reorganization Agreement, dated September 13,
2002, between Sidertubes S.A. and Tenaris S.A.
#(e)(22) Agreement, dated September 25, 2002, among NKK Corporation,
Siderca S.A., NKKTUBES, DST Distributors of Steel Tubes
Ltd., DST Japan K.K. and Tenaris Global Services, amending
provisions of the Investment Agreement, dated May 24, 2000,
among Siderca, S.A., NKK Corporation and NKKTUBES and
replacing the Shareholders' Agreement, dated May 24, 2000,
between Siderca, S.A. and NKK Corporation
#(e)(23) Amended and Restated Shareholders' Agreement, dated
September 25, 2002, between Siderca, S.A. and NKK
Corporation (included in Exhibit (e)(22))
---------------
*Included in the materials delivered to the holders of the Siderca shares and
ADSs.
+Filed as an exhibit to the tender offer statement on Schedule TO filed by
Tenaris S.A. (File No. 5-78150) on November 12, 2002, and is incorporated
herein by reference.
#Filed as an exhibit to the Registration Statement on Form F-4 filed by
Tenaris S.A. (File No. 333-99769), and is incorporated herein by reference.
13
ANNEX A
[CREDIT SUISSE FIRST BOSTON LOGO]
Credit Suisse First Boston
Corporation
Eleven Madison Avenue
Telephone 212 325 2000
New York, NY 10010-3629
November 7, 2002
Board of Directors of Siderca S.A.I.C.
Leandro N. Alem. 1067, piso 26
C1001AAF Buenos Aires
Argentina
Members of the Board:
You have asked us to advise you with respect to the fairness, from a financial
point of view, to the holders of Company Shares (as defined below) of Siderca
S.A.I.C. (the "Company" or "Siderca") other than Tenaris S.A. (the "Acquiror"),
of the Siderca Exchange Ratio (as defined below). We understand that on November
6, 2002, the Argentine Comision Nacional de Valores (the "CNV"), pursuant to
Resolution No. 14,343, approved, and authorized the making of, an offer by the
Acquiror to exchange (the "Exchange Offer") (A) one newly issued ordinary share,
par value US$1.00 per share ("Acquiror Ordinary Shares"), of the Acquiror for
every 1.0933 Class A ordinary shares, nominal value 1.00 Argentine Peso per
share ("Company Ordinary Shares"), of the Company (the "Ordinary Share Exchange
Ratio") and (B) one newly issued American Depositary Share, each representing
the right to receive ten Acquiror Ordinary Shares (together with Acquiror
Ordinary Shares, the "Acquiror Shares"), of the Acquiror for every 1.0933
American Depositary Shares, each representing the right to receive ten Company
Ordinary Shares (together with Company Ordinary Shares, the "Company Shares") of
the Company (together with the Ordinary Share Exchange Ratio, the "Siderca
Exchange Ratio") on the terms and conditions contained in the Offer Documents
(as defined below). We understand that today, the Acquiror has delivered to you
the final prospectus and form of the Oferta de Canje de acciones ordinarias
Clase A de Siderca S.A.I.C. por acciones ordinarias de Tenaris S.A. (the
"Spanish Offer Document") setting forth in the Spanish language the terms and
conditions of the Exchange Offer. The Acquiror has also filed a registration
statement on Form F-4, dated September 18, 2002, as amended as of the date
hereof, with the U.S. Securities and Exchange Commission containing a
preliminary prospectus and form of Offer to Exchange Ordinary Shares and
American Depositary Shares (the "English Offer Document") setting forth in the
English language the terms and conditions of the Exchange Offer (the English
Offer Document and the Spanish Offer Document being collectively referred to as
the "Offer Documents"). The Offer Documents also provide that pursuant to the
Exchange Offer the Acquiror will also offer to exchange (the "Tamsa and Dalmine
Exchange Offers") Acquiror Shares for all outstanding ordinary shares and
American Depositary Shares of Tubos de Acero de Mexico S.A. ("Tamsa") and all
outstanding ordinary shares of Dalmine S.p.A. ("Dalmine"). We understand that
the Acquiror intends to commence the Exchange Offer on November 11, 2002.
In arriving at our opinion, we have reviewed certain publicly available business
and financial information relating to the Company, Tamsa, Dalmine and the
Acquiror, as well as the Offer Documents. We have also reviewed certain other
information, including publicly available financial forecasts relating to the
Company, Tamsa, Dalmine and the Acquiror, provided to or discussed with us by
the Company and the Acquiror, and have met with the Company's and the Acquiror's
managements to discuss the business and prospects of the Company, Tamsa, Dalmine
and the Acquiror. We have considered certain financial and stock market data of
the Company, Tamsa, Dalmine and the Acquiror, and we have compared those data
with similar data for publicly held companies in businesses similar to the
Company, Tamsa, Dalmine and the Acquiror. We have considered the financial terms
of certain other business combinations and other
[CREDIT SUISSE FIRST BOSTON LOGO]
transactions that have recently been effected. We also considered such other
information, financial studies, analyses and investigations and financial,
economic and market criteria that we deemed relevant.
In connection with our review, we have not assumed any responsibility for
independent verification of any of the foregoing information (including the
information contained in the Offer Documents) and have relied on its being
complete and accurate in all material respects. With respect to the publicly
available financial forecasts of the Company, Tamsa, Dalmine and the Acquiror
referred to above, we have reviewed and discussed such forecasts with the
managements of the Company and the Acquiror, respectively, and the managements
of the Company and the Acquiror have advised us, and we have assumed, that such
forecasts represent reasonable estimates and judgments with respect to the
future financial performance of the Company, Tamsa, Dalmine and the Acquiror,
respectively. We have assumed, with your consent, that the Offer Documents used
to make the Exchange Offer will conform to the forms reviewed by us in all
respects material to our analyses and that the Exchange Offer and the Tamsa and
Dalmine Exchange Offers will commence promptly and be consummated in accordance
with the terms of the Offer Documents, without waiver, amendment or modification
of any material term, condition or agreement therein. In addition, we have not
been requested to make, and have not made, an independent evaluation or
appraisal of the assets or liabilities (contingent or otherwise) of the Company,
Tamsa, Dalmine or the Acquiror, nor have we been furnished with any such
evaluations or appraisals. Our opinion is necessarily based upon information
available to us and financial, economic, market and other conditions as they
exist and can be evaluated on the date hereof. Our opinion only addresses the
fairness from a financial point of view of the Siderca Exchange Ratio and does
not address whether the Siderca Exchange Ratio satisfies applicable requirements
under Argentine law or any aspect of the Tamsa and Dalmine Exchange Offers. We
are not expressing any opinion as to the actual value of the Acquiror Shares
when issued pursuant to the Exchange Offer or the prices at which Acquiror
Shares or Company Shares will trade at any time. Our opinion does not address
the relative merits of the Exchange Offer as compared to other transactions or
business strategies that might be available to the Company. We were not
requested to, and did not, solicit third party indications of interest in
acquiring all or any part of the Company.
We have been retained by the Company to render an opinion to the Board of
Directors of the Company with respect to the fairness from a financial point of
view of the Siderca Exchange Ratio to the holders of Company Shares other than
the Acquiror but did not participate in any discussions or negotiations between
the Company and the Acquiror with respect to the determination of the Siderca
Exchange Ratio. We will receive a fee for rendering this opinion. We and our
affiliates have in the past provided, and may in the future provide, financial
and investment banking services to Tamsa and other affiliates and the
shareholder of the Acquiror, for which services we have received and expect to
receive compensation. In the ordinary course of our business, we and our
affiliates may actively trade the debt and/or equity securities of the Company,
Tamsa, Dalmine, the Acquiror, the shareholder of the Acquiror and their
affiliates for our own accounts, the accounts of our affiliates and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.
It is understood that this letter is for the information of the Board of
Directors of the Company in connection with its consideration of the Exchange
Offer and does not constitute a recommendation to any holder of Company Shares
as to whether such holder should tender Company Shares pursuant to the Exchange
Offer or as to how any holder of Company Shares should vote or act on any other
matter relating to the Exchange Offer or the Tamsa and Dalmine Exchange Offers.
2
[CREDIT SUISSE FIRST BOSTON LOGO]
Based upon and subject to the foregoing, it is our opinion that, as of the date
hereof, the Siderca Exchange Ratio is fair from a financial point of view to the
holders of Company Shares other than the Acquiror.
Very truly yours,
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ GEORGE WEIKSNER
------------------------------------
Name: George Weiksner
Title: Vice Chairman
3
ANNEX B
Buenos Aires, November 14, 2002
TO THE SHAREHOLDERS
OF SIDERCA S.A.I.C.
In compliance with the resolution of the Board of Directors of the Company on
November 14, 2002 and the regulatory Rules of the Argentine Securities
Commission, set forth below is the opinion of the Board of Directors with
respect to the Exchange Offer communicated by Tenaris S.A.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF SIDERCA S.A.I.C.
In accordance with the regulations of the Argentine Securities Commission
("CNV") the exchange offer made by Tenaris S.A. ("Tenaris") on November 7, 2002
qualifies as a public exchange offer under the terms established by General
Resolution No. 401/02 of the CNV ("RG401"). In this context, the Board of
Directors of Siderca S.A.I.C. (the "Board of Directors") must, under RG401,
prepare a detailed report on the offer , (A) containing its remarks in favor of
or against the offer, and (B) expressly stating whether any agreement exists
between Siderca S.A.I.C ("Siderca") and Tenaris, or between the latter and the
members of the management of the former.
Likewise, the Board of Directors must:
C)(1) Provide an opinion on the reasonableness of the price offered in the offer
and (2) make a technical recommendation with respect to its acceptance or
rejection. For these purposes, it must state whether or not it has
requested the opinion of an independent specialized consultant, in which
case it is required to discuss the main points of the content of its
opinion.
D) Report any decision, either already adopted or imminent or in the process
of being adopted that has a reasonable possibility of being adopted, that
in the opinion of the directors is relevant as to the acceptance or
rejection of the offer.
E) Report whether the directors and executive officers that are shareholders
of the issuer plan to accept or reject the offer.
In compliance with the aforementioned obligations, the Board of Directors of
Siderca, in its meeting of November 12, 2002, without the vote of Directors
Roberto Rocca, Paolo Rocca, Roberto Bonatti, Ernesto Cosavella, Bruno
Marchettini, Carlos M. Franck, Fernando Ricardo Mantilla and Federico Alejandro
Pena, has resolved to approve this report with respect to the exchange offer
made by Tenaris ("the Exchange Offer"), which includes the corresponding
recommendation:
A) THE EXCHANGE OFFER - BACKGROUND (SUMMARY)
This report and recommendation of the Board of Directors of Siderca to its
shareholders is made in relation to the Exchange Offer described in the
following documents: (i) the press release issued by Tenaris on September 13,
2002, (ii) the preliminary prospectus filed by Tenaris with the CNV on September
19, 2002, (iii) the definitive prospectus dated November 7, 2002 (the "Argentine
Prospectus"), (iv) the Registration Statement on Form F-4 filed with the
Securities and Exchange Commission of the United States of America (the "F-4"),
(v) the supplementary documentation, and (vi) in the amendments made to such
documentation.
Under the Exchange Offer, and subject to the terms and conditions established in
relation to it, Tenaris has offered to exchange:
- one newly issued share of Tenaris, par value US$1 per share, for every 1.0933
Siderca Class A ordinary shares, nominal value ARP1 per share;
- one newly issued ADS of Tenaris (representing 10 ordinary shares of Tenaris)
for every 1.0933 Siderca ADSs;
- one newly issued share of Tenaris, par value US$1 per share, for every 0.9452
Tubos de Acero de Mexico, S.A. de C.V. ("Tamsa") ordinary shares, no par
value;
- one newly issued ADS of Tenaris (representing 10 of the Company's ordinary
shares) for every 1.8904 Tamsa ADSs; and
- one newly issued share of Tenaris, par value US$1 per share, for every 12.0267
Dalmine S.p.A ("Dalmine") ordinary shares, nominal value #0.16 per share.
In connection with the determination of the proposed exchange ratios, Tenaris
primarily considered:
- the average of the daily relative valuations among Siderca, Tamsa and Dalmine
over the 180-day period immediately prior to September 13, 2002, the business
day on which Tenaris announced its intention to obtain approval of the
exchange offer. These valuations were calculated by comparing the total market
capitalization of each of Siderca, Tamsa, and Dalmine, based on the closing
prices on each trading day of Siderca's ADSs on the NYSE, Tamsa's ADSs on the
AMEX and Dalmine's shares on the Mercato Telematico Azionario administered by
Borsa Italiana; and
- the value (approximately $70 million) attributed to the holdings of Tenaris in
other companies, which include 100% of Tenaris Global Services, 27% of
Metalmecanica S.A. and 52% of Metalcentro S.A.
The obligation of Tenaris to consummate the exchange and accept the shares or
ADSs of Siderca or Tamsa and the shares of Dalmine tendered under the Exchange
Offer is subject to a number of conditions:
For example, Tenaris will not be required to consummate the Exchange Offer, nor
accept the tenders of Siderca or Tamsa shares or ADSs, unless a sufficient
number of Siderca's total outstanding shares (in the form of shares or ADSs) and
Tamsa's total outstanding shares (in the form of shares or ADSs) are validly
tendered in the exchange and not withdrawn so that, after consummation of both
exchange offers, Tenaris holds, directly or indirectly, more than 80% of
Siderca's total outstanding shares and more than 80% of Tamsa's total
outstanding shares (in each case, in the form of shares or ADSs). Accordingly,
the exchange offer is conditioned on the valid tender without subsequent
withdrawal of more than 8.83% of Siderca's total outstanding shares and more
than 28.16% of Tamsa's outstanding shares.
In addition, Tenaris will not be required to consummate the Exchange Offer with
respect to Dalmine unless a sufficient number of Dalmine's total outstanding
shares are validly tendered and not withdrawn so that, after the consummation of
the Exchange Offer, Tenaris holds, directly or indirectly, more than 90% of
Dalmine's total outstanding shares. Accordingly, the Exchange Offer with respect
to Dalmine is conditioned on the valid tender without subsequent withdrawal of
more than 42.78% of Dalmine's total outstanding shares.
Also, subject to applicable law, Tenaris may decide not to consummate the
Exchange Offer if any legal restraints or prohibitions are imposed on the
exchange offer, or if a material adverse change occurs in the business of
Tenaris, Siderca, Tamsa or Dalmine, or if required government approvals,
including the required listing approvals, are not received. Further detail on
the information summarized herein as well as on the background and other
conditions of the Exchange Offer can be found in the Argentine Prospectus and
the F-4.
Tenaris reserves the right to lower the minimum thresholds required for the
acquisition of Siderca, Tamsa or Dalmine shares subject to the exchange offer.
For further information on the details of the Exchange Offer, the Board of
Directors recommends reading the Argentine Prospectus and other documents
provided by Tenaris or its agents in connection with the Exchange Offer.
B.1) OPINION REGARDING THE REASONABLENESS OF THE EXCHANGE OFFER
The Board of Directors must express its opinion on the Exchange Offer, including
the reasonableness of the exchange ratios, the benefits to Siderca shareholders
that accept the Exchange Offer, and the benefits
2
to Siderca of the global reorganization of the businesses of Tenaris and its
affiliates, including Siderca (together the "Tenaris Group"), all of which has
been announced by Tenaris as a strategic objective.
The Board of Directors has based this analysis on the best knowledge of its
members, the information provided by Tenaris, the knowledge of the businesses of
Siderca and the objective information on the Exchange Offer.
The directors have also considered, among other various issues, the competitive
position of Siderca if it were to maintain its present shareholder composition
and corporate structure, including the operational rigidity that results from
the control of companies with unaffiliated minority shareholders.
With respect to the benefits of participation in the Exchange Offer, Tenaris
announced that through the Exchange Offer it seeks to increase the visibility of
the steel pipe business of the companies that form the Tenaris Group; align the
interests of all shareholders across Siderca, Tamsa and Dalmine; generate
further management and operating synergies and provide a more attractive
investment opportunity in the steel pipe sector with a view to enhancing its
global competitive standing and expanding opportunities for future growth. If
the Exchange Offer is successfully completed, Tenaris would be a global company,
whose shares would be traded on various stock exchanges, with "pro forma" net
sales of US$3.100 billion in 2001 and manufacturing, marketing and distribution
capabilities strategically located to serve customers operating in major oil and
gas and industrial regions worldwide.
Currently, the group of companies that form the Tenaris Group, has a collective
manufacturing capacity of approximately 3.1 million tons of seamless pipes and
0.85 million tons of welded steel pipes.
While Tenaris may not achieve all of its objectives in the Exchange Offer, the
Board of Directors finds it reasonable to consider that the shareholders that
participate in the Exchange Offer will benefit from the cost savings from
synergies and the advantages resulting from management that is guided primarily
by considerations of economic efficiency, rather than influenced by the
necessity to propitiate and maintain a balance between the business
opportunities of the company and its subsidiaries.
In this manner, the present investors of Siderca that accept the exchange
proposed by Tenaris will be able to participate in a company of global scale in
the production of steel pipes, geographically well diversified, with the ability
to allocate production orders more efficiently among its manufacturing plants
without potential conflicts of interest among shareholders of Siderca, Tamsa,
and Dalmine.
In addition, in the case of the successful Exchange Offer, the controlling
shareholders of Siderca will continue to be the controlling shareholders of
Tenaris. In this regard, it should be emphasized that all shares issued by
Tenaris will have equal voting rights and the controlling shareholder has
reserved no voting right advantages with respect to the shares offered in
exchange to the minority shareholders.
The shareholders that accept the exchange offer will also benefit from greater
share liquidity, a larger investor base and more attention from the
international investment community than the shareholders of Siderca.
The 180-day period adopted by Tenaris in order to establish relative exchange
ratios appears reasonable since it coincides with the criteria adopted by the
Argentine legislation for the valuation of publicly-traded companies (Annex I to
Chapter XXVII, Article 24, incorporated to the codified text of the rules of the
Argentine Securities Commission by General Resolution 401/2002 of this
organization). This opinion is shared by the majority of analysis that has been
issued with respect to the transaction.
The US$70 million value attributed to the commercial network and the other
participations in non-publicly traded companies appears reasonable in light of
historical information regarding sales volume and commissions paid to the
commercial network as provided by Tenaris, as well as the reasonable value
attributable to Metalmecanica S.A. and Metalcentro S.A. PricewaterhouseCoopers
has passed upon the correctness of the market value calculations. This firm took
into account the opinion of the firm that valued the participations contributed
to Tenaris for purposes of complying with legislation in Luxembourg.
3
Finally, the firm Credit Suisse First Boston was retained by the Company to
provide an opinion to the Board of Directors regarding the exchange ratios from
a financial point of view. This firm concluded, based on and subject to the
assumptions set forth in such opinion, that the exchange ratios are fair from a
financial point of view to the shareholders of Siderca other than Tenaris.
B.2) TECHNICAL RECOMMENDATION
Making an integral evaluation and pondering the favorable and unfavorable
conditions examined in previous section B), the technical recommendation of the
Board of Directors of Siderca is that the acceptance of the Exchange Offer
should be beneficial for the shareholders of Siderca.
C) EXISTENCE OF DECISIONS ADOPTED OR IMMINENT THAT IN THE OPINION OF THE
DIRECTORS ARE RELEVANT AS TO THE ACCEPTANCE OR REJECTION OF THE OFFER.
There are no decisions adopted or imminent that, according to the opinion of
this Board of Directors, are relevant as to the acceptance or rejection of the
offer.
D) THE PLANNED ACCEPTANCE OR REJECTION OF THE OFFER BY THE DIRECTORS AND
EXECUTIVE OFFICERS THAT ARE SHAREHOLDERS OF THE ISSUER.
The directors and executive officers of Siderca that own shares of Siderca,
Roberto Rocca (192,498 shares), Federico A. Pena (33,000 shares) and Fernando R.
Mantilla (8,800 shares), have expressed their intention to accept the Exchange
Offer.
E) AGREEMENTS AMONG TENARIS, SIDERCA, AND/OR MEMBERS OF THE BOARD OF DIRECTORS
OF SIDERCA.
The Board of Directors has no knowledge to this date of agreements among the
Company or the members of the Board of Directors of Tenaris. Dr. Paolo Rocca has
been appointed as chief executive officer of Tenaris. Siderca's related-party
contracts are mentioned in the Prospectus.
By: /s/ HORACIO DE LAS CARRERAS
------------------------------------
Horacio de las Carreras
Secretary to Board of Directors
SIDERCA S.A.I.C.
4
ANNEX C
LOGO
SIDERCA PRESS RELEASE
TENARIS GROUP
SIDERCA'S BOARD OF DIRECTORS ISSUES ITS RECOMMENDATION ON THE TENARIS EXCHANGE
OFFER
Edgardo Carlos/Fernando Pardo Cesar Villavicencio
Siderca S.A.I.C. Citigate Dewe Rogerson
(54) 11 4318-4043 (212) 688-6840
www.siderca.com
Buenos Aires, November 14, 2002. Siderca S.A.I.C. (New York Stock Exchange: SDT
and Buenos Aires Stock Exchange: ERCA), a Tenaris company, announces that its
Board of Directors, in a meeting held today, has issued its recommendation on
the exchange offer made by Tenaris S.A. to Siderca's shareholders.
The Board of Directors analyzed and evaluated the conditions of the exchange
offer and other relevant factors, including the exchange ratio of one ordinary
Tenaris share for every 1.0933 Siderca Class A ordinary shares and one Tenaris
ADS (representing ten ordinary shares) for every 1.0933 Siderca ADSs (each
Siderca ADS represents 10 Class A ordinary shares). In its recommendation,
Siderca's Board of Directors stated that it considered that the acceptance of
the exchange offer from Tenaris should be beneficial to Siderca's shareholders.
Credit Suisse First Boston was engaged by Siderca to provide an opinion on the
fairness from a financial point of view of the exchange ratio to the holders of
Siderca ordinary shares and ADSs other than Tenaris. On November 7, 2002 Credit
Suisse First Boston delivered its opinion to the Siderca Board of Directors
stating that, as of the date of the opinion and based on and subject to the
assumptions and limitations expressed therein, the exchange ratio was fair from
a financial point of view to the holders of Siderca ordinary shares and ADSs
other than Tenaris.
A complete text of the opinion of Siderca's Board of Directors has been
published by the Bolsa de Comercio de Buenos Aires (the Buenos Aires stock
exchange) and an English translation will be made available to ADS holders in
accordance with U.S. securities regulations.
After due inquiry and to the best of my knowledge and belief, I certify that the
information set forth in this statement is true, complete and correct.
Date: November 15, 2002 /s/ HORACIO DE LAS CARRERAS
----------------------------------------------
Horacio de las Carreras
Secretary to the Board
2