Outokumpu establishes a joint venture to launch a turnaround for Outokumpu's tubular unit
STOCK EXCHANGE RELEASE
1 July 2011 at 9.00 am EET
Outokumpu and Andrea Gatti have signed a letter of intent on a joint venture
arrangement for Outokumpu's tubular unit (OSTP). Subject to the signing of the
final agreement a company controlled by Mr. Gatti will become a minority owner
in OSTP and will have an option to become a majority owner of the business in
the coming years.
CEO Mika Seitovirta: "We welcome Andrea Gatti as our partner in OSTP's
turnaround. I am convinced that jointly we can reform OSTP to a profitable
entity. Staying as an owner in the business enables Outokumpu to maintain the
relationship as a supplier to the OSTP units and retain a big part of the value
increase that we expect the turnaround plan to deliver."
Outokumpu and Andrea Gatti have agreed that subject to the signing of the final
agreement a company controlled by Mr. Gatti will acquire 36% of the shares in
OSTP. Additionally, Mr. Gatti will have an option to acquire shares to 51%
ownership in a three-years' time period. Outokumpu will have an option to redeem
the shares at original value if Mr. Gatti will not acquire the majority of OSTP.
It is also agreed that Outokumpu will remain OSTP's main raw material supplier.
A final agreement on the joint venture is expected to be signed by the end of
the third quarter.
OSTP will be separated from Outokumpu and it will be managed through the OSTP
Board, with a chairman appointed by Outokumpu. The turnaround plan for OSTP will
be further detailed by the partners in the joint venture and it will include
significant streamlining of the production structure, optimisation of the
product portfolio and general cost reduction.
This initial sale of shares will not result in any material financial impacts
for the Outokumpu Group. As Outokumpu will continue to be the majority
shareholder, it will initially be responsible for financing of the business and
OSTP will continue to be consolidated in Outokumpu's financial accounts. Any
future sale of shares would be executed at a price that is reflecting the then
prevailing financial performance of the business. OSTP has been loss-making for
the past three years and its operating loss in 2010 totaled close to EUR 40
million.
Andrea Gatti has over 25-years' experience in the stainless steel industry as an
entrepreneur and he was an Outokumpu executive during 2005-2009.
OSTP produces welded stainless steel process pipes and tubes as well as threaded
and butt weld fittings. It has a total production capacity of about 100 000 tons
with 11 production sites in Sweden, Finland, USA, Saudi Arabia, Estonia and
Canada. OSTP employs some 970 people.
For more information, please contact:
Mika Seitovirta, CEO, tel. +358 9 421 3200
Päivi Lindqvist, SVP - Communications and IR, tel. +358 9 421 2432, mobile
+358 40 708 5351
OUTOKUMPU OYJ
Outokumpu is a global leader in stainless steel with the vision to be the
undisputed number one. Customers in a wide range of industries use our stainless
steel and services worldwide. Being fully recyclable, maintenance-free, as well
as very strong and durable material, stainless steel is one of the key building
blocks for sustainable future. Outokumpu employs some 8 000 people in more than
30 countries. The Group's head office is located in Espoo, Finland. Outokumpu is
listed on the NASDAQ OMX Helsinki.
www.outokumpu.com