Outokumpu Gives Update on the Terni Divestment Process
06/07/2013 - In a challenging environment for the European stainless industry, Outokumpu says it is maintaining an active dialogue with the European Commission, the Italian government and local Terni institutions to facilitate the AST divestment as soon as possible.
In accordance with the commitments given to the European Commission in the context of the merger with Inoxum, Outokumpu continues to pursue the divestment of AST (Acciai Speciali Terni) stainless steel operations in Terni, Italy. In a challenging environment for the European stainless industry Outokumpu has maintained an active dialogue with the European Commission, the Italian government and local Terni institutions to facilitate the AST divestment as soon as possible. In response to recent public speculation about the divestment process in Italy, Outokumpu would like to offer some clarifications.
As communicated in connection with Outokumpu’s first quarter 2013 results in April, the timeline for the Terni divestment has been extended. The conditions of the bids Outokumpu has received so far for the remedy assets have not been satisfactory. Outokumpu continues to work intensively with all parties to provide as quick a solution as is possible.
In order to preserve AST’s competitiveness and viability during the period prior to the divestment Outokumpu has agreed at the request of the European Commission to implement a number of additional safeguards.
While AST’s day-to-day operations are not controlled by Outokumpu, these safeguards are intended to ensure that AST’s financial results and ability to continue doing business will not be adversely impacted by the on-going divestment process. The AST management will remain unchanged and will continue to work with the monitoring trustee appointed by the Commission to oversee the divestment process. AST will continue to use the same European service center network as before. AST will also continue to supply Tubificio di Terni with its products under pre-existing arrangements. Furthermore, Outokumpu has already enabled AST to utilize the Willich service center to market its unique products in Germany and at the suggestion of the Commission AST will also be supplying standard products to this service center, so that AST’s reach in Europe will continue to expand. In addition AST continues to supply significant volumes to Outokumpu’s overseas facilities.
After a constructive dialogue with AST management and the Commission, Outokumpu has also strengthened AST's equity position and empowered AST to continue its 2013 investment program. This is in addition to the € 400 million investments made in the past five years at AST. In addition, prior to the divestment, Outokumpu will continue to fully finance AST through the cash pool arrangement that AST enjoyed before the divestment was announced.
Despite the very difficult market conditions, AST’s financial performance improved in the last reported quarter (January–March 2013). This is an encouraging development considering the challenging economic environment in Europe, and especially in Italy. While the economic environment remains challenging, Outokumpu believes that AST is maintaining and strengthening its position and has full faith in the ability of AST management to lead AST through these difficult trading conditions.
