Ahmsa revokes deal with Villacero citing non-compliance

Mexican integrated steelmaker Altos Hornos de México, or Ahmsa, revoked an agreement to sell a majority of its stake to a holding company owned by a group of investors and headed by Julio César Villarreal, president of Villacero Group.

Under the agreement, shareholders in Ahmsa's holding company Grupo Acerero del Norte, or GAN, would sell 55% of their stake to Alianza Minero Metalúrgica Internacional, or AMMI - the holding company where Villarreal serves as the president.

In a statement sent Aug. 25 to the Mexican Stock Exchange, Ahmsa's president Alonso Ancira informed AMMI about the inapplicability of the agreement due to non-compliance of some clauses.

He said, "the document presents various legal irregularities, lacks validation and therefore is ineffective."

AMMI said in a statement that it will fully comply, in due time and form, with the purchase agreement signed with the Ancira family, in its capacity as shareholders of GAN.

It specified that it will work "tirelessly" to stabilize operations after the deal closes and also comply with the commitments given to the federal government pursuant to a reparatory agreement.

Ancira also added that Ahmsa had complied with the reparatory agreement with energy company Pemex with the payment of $216 million.

Ancira was accused of selling the Agro Nitrogenados plant to Pemex under overpriced conditions before the current administration came to power, with the deal causing damage to the state.

Ahmsa and Villacero agreement, announced in June last year, is expected to add operational synergies and consolidate their capacity in steel production and processing.