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Nippon Steel and Godo Steel Formalize Alliance
06/20/2007 - Nippon Steel and Godo Steel have agreed to take further alliance measures to enhance their competitive strengths, building on Nippon Steel’s ongoing supply of billets to Godo Steel.
Nippon Steel Corp., Tokyo, and Godo Steel, Ltd., Osaka, have agreed to take further alliance measures to enhance their competitive strengths.
The new agreement extends the current arrangement of Nippon Steel supplying billets to Godo Steel, and is expected to bring mutual benefits for coping with fluctuations in steel demand and tougher international competition.
One of the cooperative initiatives that will be studied and implemented as part of the agreement is Nippon Steel’s utilization of part of Godo Steel’s steelmaking and rolling capacities, particularly Godo Steel’s production capacities (OEM, etc.) at Funabashi, Osaka and Himeji works.
A second initiative to be implemented is Nippon Steel’s utilization of part of Godo Steel’s infrastructure (berths, warehouses) at Himeji Works. In addition, joint studies on environmental and recycling technologies have already begun.
Godo Steel will issue ordinary shares by third-party allotment in order to raise funds for equipment renewal, and for investments and loans needed for improvements in the structure of the electric-furnace ordinary-steel industry, and requested that Nippon Steel subscribe to the share issue.
Nippon Steel has decided to make a firm commitment to the subscription and will acquire Godo Steel voting stock up to slightly over 15% (a level at which to come under the equity method) from 9.5%, with the aim of clarifying the position of Godo Steel as a Nippon Steel Group company and ensuring the smooth conduct of studies and implementation of the alliance measures. Godo Steel will also purchase a certain amount of Nippon Steel ordinary shares.
