Altos Hornos de Mexico S.A.B. de C.V. Commences Mailing Of Disclosure Statement For April 18, 2016 Meeting Of Recognized Creditors

AHMSA well positioned for long-term growth upon lifting of suspension of payments

Signifies important step toward lifting of suspension of payments proceeding

Feb 16, 2016, 14:00 ET from Altos Hornos de Mexico S.A.B. de C.V.

MONCLOVA, COAHUILA, Mexico, Feb. 16, 2016 /PRNewswire/ -- Altos Hornos de México S.A.B. de C.V. ("AHMSA"), the leading integrated steel producer in Mexico, today announced that the company will begin mailing to the holders of its three series of notes and certain Recognized Creditors a Disclosure Statement for its meeting of Recognized Creditors (the "Creditors Meeting") scheduled for April 18, 2016 at 10:00am Central Time in Monclova, Coahuila, Mexico. 

The Disclosure Statement describes AHMSA's general payment agreement ("the Plan").  The Plan provides Recognized Creditors and Noteholders with payment in full, in Mexican pesos, of all Recognized Claims on the third anniversary of the lifting of the suspension of payments proceeding.  In addition, Eligible Creditors have the option to exchange a portion of those payment rights for cash and AHMSA's common shares, as described in the Disclosure Statement.  The Disclosure Statement is being provided voluntarily by AHMSA and is not an official part of the suspension of payments proceeding.

At the Creditors Meeting, Recognized Creditors and Noteholders will consider and vote on the adoption of the Plan, which will provide for the lifting of the suspension of payments proceeding.  AHMSA believes that the Plan will receive the requisite creditor consent as a result of ballots already filed with the First Civil Court of First Instance in the Judicial District of Monclova (the "SP Court") and the commitment of certain creditors to vote in favor of the Plan.  The vote of AHMSA's affiliates will be disregarded for purposes of determining whether or not the Plan is adopted.

AHMSA stated, "Securing approval of the Plan is one of the significant, final steps required to lift the suspension of payments, which AHMSA has been operating under.  The successful lifting will position AHMSA to enhance its long-term potential, providing the company with the ability to realize greater financial flexibility, to maximize the rationalization of its capital structure, and to compete and grow more effectively.  The lifting will also enable AHMSA to further enhance its long-term value proposition, establishing a financially strong platform from which the company can execute its operational initiatives and strategic priorities."

The company continued, "As Mexico's largest integrated steel producer, AHMSA will be uniquely positioned to capitalize on favorable growth trends in the domestic energy and manufacturing industries, including auto manufacturing, petroleum as well as natural gas pipeline projects, and infrastructure construction.  Moreover, AHMSA can be an important sparkplug for the Mexican economy over the long-term.  We are Mexico's only producer of plate, tin plate, and tin free steel, and our recently completed, self-funded El Fenix project added 1.1MM tons of plate capacity.  Our efforts support Mexico's manufacturing hub and its ability to attract foreign direct investment, thereby increasing Mexico's global economic competitiveness.  Clearly, a strong and vibrant Mexican economy means job creation and thereby, greater opportunities to improve quality of life.

"Approval of the Plan and the subsequent lifting of the suspension of payments will benefit all AHMSA stakeholders—including the state of Coahuila, where AHMSA is the state's largest employer.  Customers, business partners, and employees will benefit by being associated with a company that is better able to expand and capitalize on growth opportunities, both domestically and internationally.  With strong support from a significant number of Recognized Creditors already in place, we are confident that the Plan approval process is readily moving towards a consensual resolution," AHMSA concluded. 

The Plan was negotiated with creditors that beneficially own a majority of the Recognized Claims against AHMSA. 

The suspension of payments proceeding will be lifted upon the adoption by the affirmative vote of both the holders of at least a majority of the aggregate value of outstanding Recognized Claims (as of April 18, 2016) and not less than one-third in number of the Recognized Creditors.  If the Plan is approved by the Requisite Creditor Consent at the Creditors Meeting, the Plan will remain subject to approval by the SP Court.

The full text of the Disclosure Statement is provided here: http://cases.primeclerk.com/Ahmsa

This press release does not constitute an offer to sell, or a solicitation of an offer to purchase, the securities described herein, in any jurisdiction, to or from any person to whom it is unlawful to make such offer or solicitation of an offer in such jurisdiction.

About AHMSA

AHMSA, an integrated steel producer, has two steel plants located in Monclova, Coahuila, and operates its own iron and metallurgical coal mines.  Its current nominal production capacity is more than 5 million tons of liquid steel per year, which is then transformed into diverse finished products.  Additionally, AHMSA operates thermal coal mines in Mexico.  It employs over 19,000 workers in steel plants, mines and services.

Forward-Looking Statements

This press release may contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  These statements are based on management's current expectations or beliefs about future events and financial, political, economic and social trends and assumptions it has made based on information currently available to it.  AHMSA cannot assure that any expectations, forecasts or assumptions made by management in preparing these forward-looking statements will prove accurate, or that any projections will be realized.  Actual results could differ materially from those projected in the forward-looking statements as a result of inaccurate assumptions or a number of risks and uncertainties.  Forward-looking statements contained herein speak only as of the date of this release.  AHMSA does not undertake any obligation to update or revise publicly any forward-looking statements, whether to reflect new information, future events or otherwise.

Media Contact

Madisen Obiedo / Ross Lovern
Kekst
(212) 521-4961
madisen.obiedo@kekst.com / ross.lovern@kekst.com

ADDENDUM

About Altos Hornos de Mexico S.A.B. de C.V. ("AHMSA" or "the Company")

  • AHMSA is the leading integrated steel producer in Mexico.
    • It is the only producer of plate, tin plate, and tin free steel in Mexico.
    • Produced approximately 5 million tonnes of liquid steel and 2.89 million tonnes of finished steel products in 2015.
      • Benefitted from completion of self-funded El Fenix project, which added 1.1 million tonnes of plate capacity.
  • AHMSA's main steel making facilities and corporate offices are located in Monclova, Coahuila.
    • AHMSA is incorporated under the laws of Mexico and all of AHMSA's steel production and related mining facilitates are located in Mexico.
    • The Company has a workforce of approximately 19,000 employees, and it is the largest employer in the state of Coahuila.
  • The Company operates integrated steel mills with a competitive cost structure.
    • It owns its principal raw materials supplier, as well as its iron and coal mines.
  • AHMSA's products primarily serve the construction, manufacturing, petroleum, automotive, packaging, and home appliance industries.
    • In 2015, Mexico accounted for 82% of Company sales; the U.S. and other countries accounted for 14% and 4%, respectively.
    • As of September 30, 2015, total assets were Ps. 63,593 million, revenues were Ps. 31,798 million, and EBITDA was Ps. 122.26 million.

Background on Suspension of Payments

  • AHMSA received a judicial declaration of Suspension of Payments (the "SP Proceeding") on May 25, 1999, administered under the Mexican law of Bankruptcy and Suspension of Payments (the "SP Law"), which was the law in effect at the time, even though the SP Law was superseded by the Ley de Concursos Mercantiles in May 2000.
  • The SP Law allows companies to:
    • Continue their operations;
    • Seek a debt restructuring agreement with creditors in an orderly fashion; and
    • Avoid declaration of bankruptcy and liquidation of assets upon restructuring.
  • Under the SP Law, AHMSA was granted protection from collection of any indebtedness arising out of transactions completed prior to the commencement of the SP Proceeding, interest ceased to accrue on all of AHMSA's outstanding indebtedness, and all of AHMSA's obligations were converted into Mexican pesos at the exchange rate in effect on May 25, 1999.

Meeting of Recognized Creditors ("Creditors Meeting") is scheduled for April 18, 2016 at 10:00am Central Time in Monclova, Coahuila

  • At the Creditors Meeting, Recognized Creditors and Noteholders will consider and vote on AHMSA's general payment agreement (the "Plan"). 
  • Based on the ballots already filed with the SP Court and the commitment of certain creditors to vote in favor of the Plan, AHMSA expects the Plan to be approved at the Creditors Meeting. The vote of AHMSA's affiliates will be disregarded for purposes of determining whether or not the Plan is adopted.
  • The Plan—should it be accepted at the Creditors Meeting and receive final approval from the SP Court—provides Recognized Creditors with payment in full, in Mexican pesos, of all recognized claims on the third anniversary of the lifting of the SP Proceeding.
    • Payment right is non-transferable and will not bear interest.
    • The Mexican peso amount of recognized claims originally denominated in U.S. dollars will be Ps.9.5468 per US$1.00, the exchange rate in effect on May 25, 1999.
  • Additionally, certain eligible Creditors ("Eligible Creditors") may make an Equity Election to receive AHMSA's common shares and cash denominated in U.S. dollars in exchange for 69.15% of their Payment Rights.
    • For each Ps.66.1594 of SP Payment Rights exchanged, an Eligible Creditor will receive a number of shares equal to the sum of (a) 1 and (b) 0.0631823 multiplied by an election percentage (which shall be determinable only after all Equity Elections are received) and cash in an amount equal to US$0.1809825.
  • On November 7, 2014, AHMSA and certain funds associated with Black River Asset Management LLC and D.E. Shaw & Co. (the "Plan Supporters"), who hold nearly half of the recognized claims, entered into a Conditional Agreement in order to facilitate approval of the Plan and to reduce AHMSA's debt burden.

Successful lifting of SP Proceeding will provide AHMSA with greater financial stability and the ability to seek approval for listing of AHMSA shares on the Bolsa Mexicana de Valores (the "Bolsa")

  • The capitalization included in the Plan will allow AHMSA to greatly reduce its level of debt.
  • The lifting will enable AHMSA to seek approval for relisting of its shares on the Bolsa.
    • While AHMSA's shares are listed on the Bolsa, trading has been suspended since 1999.
    • AHMSA intends to seek the lifting of the suspension of trading of its shares on the Bolsa following lifting of the SP Proceeding.
    • The Company does not currently anticipate listing the shares on any U.S. market or filing periodic reports with the U.S. Securities and Exchange Commission.

 

SOURCE Altos Hornos de Mexico S.A.B. de C.V.