Arcelormittal South Africa Limited · JSE:ACL
Arcelormittal South Africa — LNM Holdings — Merger or Acquisition (December 2002)
32 slides from Arcelormittal South Africa's merger presentation, December 2002
Slide 1: LNM Holdings N.V.
LNM Holdings N.V. December 2002
Slide 2: Disclaimer
Disclaimer Iscor Limited shares are publicly traded on the JSE Securities Exchange South Africa (the “JSE”) lists. As such, Iscor Limited is regulated by the JSE and is subject to the provisions of the Listings Requirements of the JSE, The Insider Trading Act 135 of 1998, the Companies Act 61 of 197
Slide 3: Partial Offer to Iscor Limited shareholders
Partial Offer to Iscor Limited shareholders 3
Slide 4: Agenda
Agenda Background to LNM and The LNM Group LNM’s involvement in Iscor Limited The Offer Appendix - additional information on The LNM Group 4
Slide 5: Background to LNM and The LNM Group
Background to LNM and The LNM Group 5
Slide 6: The LNM Group Overview
The LNM Group Overview Established in 1976 as a 60ktpa rod mill in Indonesia Now 2nd largest global steel producer The most global steel company in the world - vertically integrated steel making facilities in 11* countries - broad geographic and product diversification A successful track record in b
Slide 7: A Global Force in Steel
A Global Force in Steel The LNM Group Ispat International N.V. LNM Holdings N.V. P.T.Ispat Indo (The Netherlands Antilles) (The Netherlands) (Indonesia) Ispat Stahlwerk Ispat Inland Ispat Sidbec (USA) (Canada) Ruhrort Ispat Annaba Ispat Karmet Ispat Sidex (Germany) (Algeria) (Kazakhstan) (Romania) I
Slide 8: Global Presence
Global Presence Ispat Inland Ispat Sidbec Ispat International LNM Holdings N.V. Ispat Hamburger Stahlwerke Nova Hut* Ispat Karmet (U.S.A.) (Canada) Limited (U.K.) Ispat International N.V. Ispat Stahlwerk Ruhrort (Czech Republic) (Kazakhstan) (The Netherlands) Ispat Walzdraht Hochfeld (Germany) Ispat
Slide 9: World Class Facilities
World Class Facilities In ‘000 MT Company Capacity (mt) Products Technology Ispat Inland, U.S.A. 6,000 Flat / Long BOF / EAF Ispat Mexicana, Mexico 4,000 Flat DRI-EAF Ispat Karmet, Kazakhstan 5,250 Flat BOF Ispat Sidbec, Canada 1,700 Flat / Long DRI-EAF Caribbean Ispat, Trinidad 1,000 Long DRI-EAF I
Slide 10: Global Management Philosophy
Global Management Philosophy Manage each subsidiary as a decentralised, incentive based and entrepreneurial business unit Continuous operational improvements through Knowledge Integration Programme (“KIP”) - implement best practice in each discipline through inter-company and industry-wide benchmark
Slide 11: Turnaround Expertise
Turnaround Expertise LNM Group has established a reputation for improving the performance of steel producing assets globally Implementation of group-wide best practice to improve operations - lower costs - increase value added - improve quality Appropriate capital expenditure programmes for real imp
Slide 12: Turnaround Progress
Turnaround Progress Steel Shipments (000 MT) Cost US$ / MT LNM 9m prior to 9m in 9m prior to 9m in Operating Subsidiary Acquired acquisition 2002* Acquisition 2002* Karmet, Kazakhstan 1995 1,707 2,810 231 123 Sidex, Romania 2001 2,333 3,037 237 198 Annaba, Algeria 2001 637 986 337 216 * Figures for
Slide 13: Market Leadership in our Chosen Markets
Market Leadership in our Chosen Markets Group Customers Base - A Who’s Who of Leaders in Industry TO YO TA 13
Slide 14: Building Leadership in the Global Steel Industry
Building Leadership in the Global Steel Industry Reputation for World class operating employee efficiency and relations/HR product quality practices High quality, low cost assets Customer One of the service world’s largest orientation and fastest growing steel Product and producers geographic Signif
Slide 15: LNM's involvement in Iscor Limited
LNM’s involvement in Iscor Limited 15
Slide 16: Background
Background Entered into Business Assistance Agreement (BAA) in November 2001 - approved by shareholders in January 2002 - required LNM to invest US$75 million in Iscor Limited equity - allows LNM to earn up to 10% of Iscor Limited upon reducing Iscor Limited cost base by R700 million (in January 200
Slide 17: Share Price Evolution
Share Price Evolution Share price (R) 30 Iscor Limited shareholders approve BAA 25 LNM signs 20 BAA 15 LI FT % UP 10 266 5 0 N D J F M A M J J A S O N ISCOR LIMITED Source: DATASTREAM and HSBC analysis 17
Slide 18: Iscor Limited value unbundled
Iscor Limited value unbundled ISCOR LIMITED Share price 600 KUMBA RESOURCES Source: DATASTREAM and HSBC analysis (rebased to 100) 550 500 450 400 350 300 250 200 150 100 50 N D J F M A M J J A S O N Note: Not adjusted for Iscor rights issue LNM considers that the post unbundling benefits for shareho
Slide 19: Actions taken under BAA
Actions taken under BAA A total of 31 group visits so far (17 LNM to Iscor & 14 Iscor to LNM) INTERACTION WITH LNM Objective: generate cost savings ideas, transfer knowledge & help implement improved practices Some major areas of impact: - Blast Furnace: reline/ campaign extension, burden/ fuel rate
Slide 20: Actions taken under BAA
Actions taken under BAA Iscor units’ participation in LNM KIPs on ironmaking/ KNOWLEDGE steelmaking (Romania), wire rod (Germany), hot rolling SHARING (US) & materials (Canada) Initiation of Iscor’s own KIP program with LNM assistance Significant sharing of expertise in e-sales/ marketing, R&D, capi
Slide 21: Actions taken under BAA
Actions taken under BAA Intensive benchmarking across operations from coke making BENCHMARKING to rolling, procurement, transportation logistics and IT among others Significant cost savings ideas generated mainly towards improvements in yield, productivity, maintenance, refractory, quality & purchas
Slide 22: Actions taken under BAA
Actions taken under BAA Effective savings in capital projects within all business CAPITAL units, particularly at VDB EXPENDITURE Recent focus on BF reline, Sinter plant upgrade, HSM automation, BOF De-sulphurisation, BOF Off-gas recovery and Coke oven gas cleaning Quick savings realized in - importe
Slide 23: Iscor Limited Results Since LNM Involvement
Iscor Limited Results Since LNM Involvement September quarter y/e June Rm 2002 2001 2002 2001 Revenue 4,849 3,191 14,188 10,883 Net operating profit 885 153 1,308 609 - Flat products 524 86 842 460 - Saldanha Steel 128 (46) (247) - - Long products 223 102 679 159 - Suprachem 30 15 121 67 - Group / o
Slide 24: The Offer
The Offer 24
Slide 25: Rationale
Rationale LNM wishes to increase its holding above 35% and retain remuneration shares under the BAA LNM has discussed its participation with - Iscor Limited management - South African Government LNM has concluded that Iscor Limited should at this time - remain a South African listed entity - have a
Slide 26: Offer Terms
Offer Terms LNM is making a partial offer in cash for up to 12.19% of Iscor Limited’s issued shares Offer price of R30.00 per share Premium of - 38.2% over the closing price on 2 December 2002 - 18.6% over Iscor Limited’s all time closing high - 27.0% over 30 day volume weighted average closing pric
Slide 27: Benefits for Iscor Limited
Benefits for Iscor Limited Access a greater level of technology Further enhance co-ordination of purchasing and marketing Further accelerate Iscor Limited’s transformation into a world class producer In LNM’s view, the offer should not adversely affect the - independence of Iscor Limited Board - mai
Slide 28: Conditions
Conditions Approval by Iscor Limited shareholders in general meeting - shareholders to waive requirement to make a mandatory offer in respect of the partial offer Recommendation of Iscor Limited Board Approval by SRP No governmental or regulatory proceedings affecting the offer No material adverse c
Slide 29: Indicative Timetable
Indicative Timetable 3 December 2002 - Firm Intention Announcement 6 December 2002 - Post offer document 20 December 2002 - Board response and Notice of Meeting 17 January 2003 - EGM 24 January 2003 - Closing 29 January 2003 - Payment of consideration 29
Slide 30: Additional information on The LNM Group
Additional information on The LNM Group 30
Slide 31: Joint Ventures and Subsidiaries
Joint Ventures and Subsidiaries Products Facility Capacity Percentage Country (‘000) Ownership Raw Materials Iron ore Minorca Mine 3,000 100% USA Iron ore Empire Mine 8,000 40% USA Iron ore Peña Colorada 3,500 50% Mexico Iron ore Ispat Tebessa 3,000 70% Algeria Iron ore Lisakovski/Kentube/Atasu Mine
Slide 32: The LNM Group
The LNM Group www.lnmnv.com 32