The Telegraph
Since 1st March, 1999
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Friday test for Mittal magic
Board honours evenly shared

Luxembourg, June 26 (Agencies): It may be some while before Lakshmi Mittal can uncork the bubbly for the capture of Arcelor.

Come Friday and at least 50 per cent of Arcelor shareholders must vote to reject a rival merger proposal with Russia’s Severstal, controlled by Alexei Mordashov.

Arcelor and Mittal bankers said Friday’s vote was crucial as a failure to block the Mordashov deal would trigger an Arcelor share issue for Severstal, creating difficulties for Mittal. Severstal insisted its tie-up with Arcelor was binding and said it was reviewing its options amid fury from the Russian government and politicians.

Meanwhile, Mittal would become president of Arcelor-Mittal, while Arcelor’s current chairman Joseph Kinsch would continue to be in the position till his retirement. Arcelor CEO Guy Dolle faces imminent replacement after spending five months marshalling his company's defences against Mittal Steel.

“Initially, the chairman position will be held by Kinsch and the president position will be held by Mittal. Upon the retirement of Kinsch, Mittal will assume the role of chairman and the successor to the president will be proposed by Kinsch,” Mittal Steel said.

For three years, the agenda of each board meeting of Arcelor-Mittal shall be jointly agreed by the chairman and the president and shall include any matters proposed to be included on the agenda jointly by them.

“For a period of three years, the Mittal family shall vote in shareholders’ meeting in accordance with the position expressed by the company board of directors, unless Mittal opposes any such decision, in which case the Mittal family shall have the right to vote at such meeting as it sees fit,” Mittal Steel said.

The Mittal family has also agreed to a standstill at its level of ownership following completion of the revised offer and any subsequent offer or compulsory buy-out, or at a ceiling of 45 per cent of the then issued company shares if and when the Mittal family’s holding falls below 45 per cent.

“The Mittal family will be entitled to cross such thresholds in certain circumstances, such as with the consent of a majority of the independent directors or in case of passive crossing of such thresholds,” Mittal Steel said.

The Mittal family has agreed to a five-year lock-up, subject to certain exceptions, including the right to dispose of up to 5 per cent of the share capital after the second year.

Each initial board of directors will be composed of 18 non-executive members, the majority of whom will be independent. Six members will be nominated by Mittal Steel, three of whom will be independent. “Six members will be from the existing Arcelor board. Three members will be from the Arcelor board representing existing Arcelor major shareholders. A further three members will be employee representatives,” the statement said.

The management board will comprise the current four members from the Arcelor management board plus an additional three members nominated by Mittal Steel’s current board of directors.

Aditya Mittal will join the new management board, while other Mittal Steel executives will be named to the board in due course, it added.

There is also no agreement on Dofasco, the Canadian unit Arcelor bought this year.

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