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November 6, 2008
 
Metal One Corporation
Nippon Steel Trading Co., Ltd.
Nippon Steel Corporation
 
Plans to Merge Coil Centers Located in Eastern China
 
Metal One Corporation (headquartered in Minato-ku, Tokyo; president: Moriji Kanada); Nippon Steel Trading Co., Ltd. (headquartered in Chiyoda-ku, Tokyo; president: Seiki Miyamoto); and Nippon Steel Corporation (headquartered in Chiyoda-ku, Tokyo; president: Shoji Muneoka) have been making concrete plans to merge their coil center subsidiaries located in eastern China, namely, Shanghai Jiari Precise Steel Sheet Products Co., Ltd. (Shanghai Jiari; president: Yoshihisa Hyodo) and Suzhou Nippon Steel Service Center Co., Ltd. (Suzhou Nippon Steel; executive director: Yuji Yokoyama), since April of this year.

The three shareholder firms have reached a basic agreement on the equity stakes they will hold when the two coil centers are merged and agreed to adjust the balance of their shareholdings leading up to the merger. After obtaining the two coil centers' consent and carrying out procedures to receive permission from Chinese government authorities, equity stakes will be brought into balance by the end of January 2009.

Based on this agreement, the three shareholders and two coil centers will look into and implement initiatives to strengthen the corporate structure through such measures as restructuring to cut costs and effectively using management resources by unifying management as part of their efforts to further strengthen business foundations in the high grade steel sheet sector in eastern China.

Similar consideration will be given to valid proposals in other regions.

1. Background and Goal of the Merger
Both coil centers have developed businesses that involve processing such high grade steel sheet products as electrogalvanized and non-oriented electrical sheets, handling mainly Nippon Steel products, and selling to customers in eastern China.
Amid concerns that competition in the high grade steel sheet sector will heat up from here on in conjunction with additional restrictions on trade in processed goods and reassessments of incentives for imported goods as well as leading Chinese mills' recent expanded capabilities to supply electrogalvanized and electrical sheets, we have looked into initiatives to bolster management foundations through such measures as unifying management to effectively use management resources and restructuring to cut costs.

2. Content of the Agreement
(1) Ultimate shareholding ratios following the merger of Shanghai Jiari and Suzhou Nippon Steel:
Metal One (55%), Nippon Steel Trading (35%), Nippon Steel (10%)
(2) Consolidation of equity stakes in Shanghai Jiari and Suzhou Nippon Steel (first phase leading up to the merger of the two coil centers):
Metal One (55%), Nippon Steel Trading (40%), Nippon Steel (5%)
Note 1: The change in equity stake ratios is scheduled for the end of January 2009.
Note 2: The adjustment of equity stake balances is to be carried out through mutual transfers of current shareholdings.
  Current Shareholding Structure
Shanghai Jiari: Metal One (79.94%), Nippon Steel Trading (10.93%), other (9.13%), Suzhou Nippon Steel: Nippon Steel Trading (90%), Nippon Steel (10%)

 

Outline of Coil Centers
Shanghai Jiari Precise Steel Sheet Products Co., Ltd.
  Headquarters: Plot 10, Industry Development Zone, Jiading District, Shanghai, China
  Representative: Yoshihisa Hyodo, President
  Date of establishment: August 1994
  Capitalization: US$12.06 million
  Shareholders: Metal One (79.94%), Nippon Steel Trading (10.93%), other (9.13%) (as of October 31, 2008)
  Sales: 708 million yuan (term ended December 2007)
  Number of employees: 138 (as of July 31, 2008)
  Main facilities: 3 large slitter lines, 4 leveler lines, 4 down shearing lines, 1 500-tonne press, 1 300-tonne press
 
Suzhou Nippon Steel Service Center Co., Ltd.
  Headquarters: 112 Changyang jie, Suzhou Industrial Park, Suzhou, Jiangsu, China
  Representative: Yuji Yokoyama, Executive Director
  Date of establishment: August 2003
  Capitalization: US$11.7 million
  Shareholders: Nippon Steel Trading (90%), Nippon Steel (10%) (as of October 31, 2008)
  Sales: US$36.87 million (term ended December 2007)
  Number of employees: 59 (as of June 30, 2008)
  Main facilities: 1 large slitter line, 1 mini slitter line, 2 leveler lines (existing facilities); one slitter line for electrical sheets, one mini slitter line for electrical sheets (new facility)
   
   
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