ADRs in Focus: Latin American metals decline

NEW YORK - Shares of Latin American industrial metals producers trading on U.S. exchanges fell sharply on Wednesday after Venezuelan President Hugo Chavez said his government was near a compensation deal over the nationalization of a subsidiary of Ternium SA.

Chavez did not give more specifics when he made the announcement Tuesday at the Mercosur trade bloc summit in Argentina, pending a "friendly agreement" with the steel maker Siderurgica del Orinoco, or Sidor, the country's largest steel maker.

Sidor was controlled by Luxembourg-based Ternium until it was officially taken over in May by presidential decree. Chavez accused the company of exploiting workers.

Since then, Ternium shareholders have awaited news regarding how they will be compensated for the takeover. Initially, Ternium asked for roughly $4 billion in exchange for its 60 percent share. But the Venezuelan government balked at that offer, at one point saying the stake is not worth more than $800 million.

ADRs of Ternium — which itself is 60 percent owned by Italian-Argentine conglomerate Techint Group — tumbled $3.03, or 7.4 percent, to $37.97.

ADRs, or American Depositary Receipts, are securities designed to allow U.S. investors to trade shares of companies based overseas.

Other industrial metals makers also declined Wednesday. Brazil's Companhia Siderurgica Nacional SA lost $3.43, or 8.1 percent, to $39.28. Techint-owned Tenaris SA gave up $3.25, or 4.5 percent, to $69.72.

Mexico's Grupo Simec SAB de CV slipped 89 cents, or 5.4 percent, to $15.68. Brazil's Gerdau SA gave up $1.78, or 7.3 percent, to $22.33.

Broader ADR markets declined. The Bank of New York Mellon Latin America ADR Index lost 13.19 points, or 2.9 percent, to 438.67.

The Bank of New York Mellon Composite ADR Index slipped 2.71 points, or 1.6 percent, to 163.40 as U.S. indexes fell.

Ternium, which is controlled by Argentine-Italian conglomerate Techint Group, has asked for roughly US$4 billion (euro2.6 billion) in exchange for its 60 percent share, according to Chavez.

A top government official recently said that Ternium's majority stake in the steel maker is not worth more than US$800 million (euro514 million).

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