Venezuela Completes Sidor Nationalization

Argentine steel company Ternium says it has completed the sale of Sidor to Corporacion Venezolana de Guayana, which is controlled by the Venezuelan government, for a total of $1.97bn. Of that amount, Ternium received $400m in cash. Some $945m will be paid in 6 quarterly installments and the rest paid at maturity in October 2010. The buyer assumed operational control of Sidor in July. Itau Securities says in a research note that the deal is positive for Usiminas, which owns a 14.25% stake in Ternium. “Because investors had been assuming zero value for Sidor’s assets, we believe this news is positive for Usiminas. After this agreement, investors can add $285m (14.25% x US$1.97 billion in compensation) of value for Usiminas, which corresponds to 3.5% of Usiminas’ market cap,” Itau says. The shop expects Usiminas to outperform its steel peers following this news.