ANNUAL REPORT ARCELOR 2003 - paperJam

The market tightness provoked by this unusual situationwill result in the immediate future in price increases forraw materials (iron ore, coal, coke and scrap) and for seafreight due to the scarcity of supply. This fact, coupledwith a low inventory level and with better growth prospectsfor users in Europe, has already led to price increaseannouncements by some European steelmakers. Theseincreases are expected to continue over the year.After a year of consolidation and integration, 2004 will bea year of change for Arcelor. With a strong financialstructure, the Group should now be able to extend itsstrategic thinking to areas other than restructuring. Thishas already begun and will continue over the next fewyears under the commitments made at the time of itscreation. Arcelor can also look forward to further internationalexpansion.EVENTS AFTER CLOSINGOn February 17, 2004, Arcelor announced that itssubsidiary J&L Specialty Steel, LLC has signed anagreement to sell most of its assets to a wholly-ownedsubsidiary of Allegheny Technologies Incorporated.The transaction, which should be finalised in May 2004,is subject to the completion of due diligence and apositive outcome of the collective bargaining negotiationswith USWA (United Steelworkers of America)both at Allegheny and at J&L. It is also subject to theapproval of the preferred creditors of Allegheny Technologiesand the oversight authorities.Even though the finalisation of this transaction is subjectto several conditions, the parties are actively working forthe success of the operation.J&L Specialty Steel is a major player in the area of flatproducts made of stainless steel.The company is headquartered in Coraopolis, Pennsylvania,with plants in Midland, Pennsylvania, and Louisville, Ohio.J&L is a wholly-owned subsidiary of Arcelor.On February 11, 2004, Arcelor signed an agreement withBagoeta S.L, a majority shareholder in Conducciones yDerivados S.A. (Condesa) for the purpose of selling itstubes business.The finalisation of the transaction is subject to the approvalof the respective competition oversight authorities andthe conclusion of agreements with the financial institutionsfinancing the operation.The scope of this sale covers:- 100% of the capital of Arcelor Tubes, S.A., of AlessioTubi, Spa, of Exma S.A. and of Aceralia Tubos SL.;- 10% of the capital of Industube, subject to the rights offirst refusal of the other shareholders; and- 30% of the capital of Condesa. The remaining 18.84%of the capital of Condesa held by the Arcelor group iscovered by put and call option contracts.In 2003 the tubes business of the Arcelor group shippedover 1.2 million tonnes of steel for turnover of 587 millioneuros.Condesa is a major European player in the tube market.In February, as part of the process to optimise the balancesheet position and reduce the cost of its debt, Arcelordecided to redeem early the 3% O.C.E.A.N.E. maturingon January 1, 2006, effective March 22, 2004, as theconditions for this redemption had been met. TheseO.C.E.A.N.E. represented 350 million euros of debt at theend of December 2003.Following the announcement of this early redemption,requests to exercise the right to the allocation of shareswere received in respect of 22,490,577 O.C.E.A.N.E.bonds, or 81.05% of the initial issue, which were servedby the supply of 22,490,577 shares from Group treasuryshares, thus strengthening the consolidated equity of theGroup.The remaining O.C.E.A.N.E. 2006 bonds in respect ofwhich no request for share allocation had been received(5,256,273) were redeemed on March 22, 2004 at a unitprice of 13.89112 euros (including accrued couponinterest since January 1, 2004).On March 15, 2004, Arcelor implemented a level 1American Depositary Receipts (“ADR”) programin order to improve the liquidity of the Arcelor share andits distribution with American investors. ADRs arecertificates issued by a depositary bank, representingshares of a non-American company (American DepositaryShares, ADS).82ANNUAL REPORT ARCELOR 2003