Arcelor, Mittal Steel boards decide not to sue Stichting

Arcelor announced January 10 that the boards of directors of Mittal Steel Company NV and Arcelor S.A. have decided not to initiate litigation seeking to dissolve the Strategic Steel Stichting, an independent Dutch foundation, with a view to obtaining the transfer to Arcelor of the 89 percent of the shares of Dofasco Inc., the North American steelmaker, currently held by the Stichting. Arcelor Mittal indicated that the boards reached this decision based on opinions from legal experts that the prospects for success of litigation against the Stichting are remote.

Under a letter agreement dated January 26, 2006, with ThyssenKrupp AG, Mittal Steel agreed to cause Arcelor to sell Dofasco to ThyssenKrupp if Mittal Steel is able to “assert effective management control over Arcelor with the ability to sell Dofasco.” In addition, under a consent decree with the U.S. Department of Justice, which was filed with the U.S. District Court in Washington, D.C., on August 1, 2006, in order to resolve certain U.S. competition concerns, Mittal Steel agreed to use its best efforts to sell Dofasco to ThyssenKrupp or, if Dofasco cannot be sold due to the Stichting, to sell certain alternative assets. The Stichting’s holding of the Dofasco shares currently prevents their sale without the Stichting’s consent.

By resolutions adopted respectively on September 25 and on October 11, 2006, the boards of Mittal Steel and Arcelor formally requested that the Stichting dissolve and return the Dofasco shares to Arcelor. On November 10, 2006, the Stichting’s board of directors unanimously decided not to dissolve and to retain the Dofasco shares, thereby continuing to prevent their sale.

On December 22, 2006, ThyssenKrupp initiated summary legal proceedings against Mittal Steel in the District Court in Rotterdam, alleging that Mittal Steel has breached the letter agreement by failing to cause Arcelor to initiate legal proceedings against the Stichting. The suit seeks a court order directing Mittal Steel to cause Arcelor to commence summary proceedings against the Stichting in the Dutch courts.

Simon Evans, Mittal Steel’s group general counsel, stated that: “ThyssenKrupp’s suit is entirely without merit. Mittal Steel has taken all reasonable actions to comply with the letter agreement and to obtain the dissolution of the Stichting. Mittal Steel is not obligated to commence litigation that has only a remote prospect of success.”

A hearing on ThyssenKrupp’s suit has been scheduled for January 11 before the president of the District Court in Rotterdam.