Form 20-F - Gerdau

Shareholder
Common
Shares
% Preferred
Shares
Metalúrgica Gerdau S.A. 42,897,208 83.35 22,509,988 23.23
BNDES Participações S.A. – BNDESPAR 3,801,058 7.39 1,971,391 2.03
Santa Felicidade Com. Imp. Exp. Prod. Sid.
Ltda. * 1,218,034 2.37 4,913,618 5.07
Gersul Empreendimentos Imobiliários S.A. * 971,379 1.89 - -
Grupo Gerdau Empreendimentos Ltda. * 712,148 1.38 12,261 0.01
Members of the Board of Directors and
Executive Officers as a group (16 members) 7,897 0.02 112,905 0.12
* Controlled by or affiliated with Metalúrgica Gerdau S.A.
Metalúrgica Gerdau S.A. and its subsidiaries hold 90.78% of the voting capital of Gerdau S.A. and thus have
the ability to control the Company’s Board of Directors as well as its management and operations.
%
B. RELATED-PARTY TRANSACTIONS
Transactions of the Company with related parties consist of (i) loans and (ii) commercial operations with
subsidiaries and related parties.
(i)
(ii)
Gerdau S.A. maintains loans with some of its subsidiaries and other affiliates by means of loan
contracts, which are repaid under conditions similar to those prevailing in the open market. Contracts
between related parties and subsidiaries in Brazil incur interest at the average market rate Contracts
with the Group’s foreign companies incur interest at LIBOR + 3%/year and are subject to indexation
based on variations in the exchange rate.
Commercial operations between Gerdau S.A. and its subsidiaries or related parties basically consist of
transactions involving the purchase and sale of inputs and products. These transactions are carried out
under the same conditions and terms as those of transactions with non-related third parties. The
commercial operations also include payments for the use of the Gerdau brand and payments relating to
loan guarantees.
On April 16 th , 2004, Gerdau Ameristeel sold 26,800,000 common shares to its majority shareholder, Gerdau S.A. at a
price of Cdn$ 4.90 per share, the closing price of the Company’s common shares on the Toronto Stock Exchange on
March 31, 2004. As a result of the transaction, Gerdau increased its stake in Gerdau Ameristeel from 68.6% to 72.3%.
Gerdau Ameristeel intends to use the total net proceeds of approximately US$100 million for general
corporate purposes, which may include funding capital equipment or working capital and repayment of debt.
C. INTERESTS OF EXPERTS AND COUNSEL
Not applicable.
ITEM 8.
FINANCIAL INFORMATION
A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
The Company’s financial statements are included in Item 18.
Legal Proceedings
Like other Brazilian company’s, Gerdau S.A. is a party to claims with respect to tax, labor and civil law,
most of them arising in the regular course of business. Management believes, based in part on advice from legal
counsel, that the reserve for contingencies is sufficient to meet probable and reasonably estimable losses in the event
of unfavorable rulings, and that the ultimate resolution will not have a significant effect on its consolidated financial
position as of December 31, 2003. The most significant legal and administrative disputes (involving amounts
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