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 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.