Filed Pursuant to Rule 424(b)(5)
Registration No. 333-171964

 

Calculation of Registration Fee

 

 

 

Prospectus supplement

(To prospectus dated January 31, 2011)

 

 

Ternium S.A.

 

18,807,590 American depositary shares

Representing 188,075,900 ordinary shares

 

The selling shareholder named in this prospectus supplement is offering 18,807,590 of our American Depositary Shares (“ADSs”). Each ADS represents ten of our ordinary shares, with a par value of USD1.00 per ordinary share (“ordinary shares”).

 

Concurrently with this offering and subject to certain conditions, the selling shareholder will also sell in a concurrent purchase and repurchase transaction, 41,666,666 ordinary shares to our wholly-owned subsidiary Ternium International Inc. (“Ternium International”) for an aggregate consideration of USD150 million and 27,777,780 ordinary shares to Techint Holdings S.àr.l. (“Techint”), our controlling shareholder, for an aggregate consideration of USD100 million, such sales being referred to herein as the concurrent repurchase transaction. The ADSs representing ordinary shares currently held by the selling shareholder that will not be sold in the concurrent repurchase transaction are being offered hereby. Closing of the concurrent repurchase transaction is conditioned upon closing of this offering but not vice-versa. See “Summary” and “Major shareholders” for more information on the concurrent repurchase transaction.

 

We will not receive any proceeds from any ADSs sold in this offering.

 

The ADSs are listed on the New York Stock Exchange under the symbol “TX”. On February 9, 2011, the last reported sales price of the ADSs on the New York Stock Exchange was USD36.75 per ADS.

 

Investing in the ADSs involves risks. See “Risk Factors” beginning on page 9 of our annual report on Form 20-F for the year ended December 31, 2009, incorporated by reference herein, as well as “Risk Factors” beginning on page 5 in the accompanying prospectus and page S-17 hereof.

 

 

The selling shareholder has granted an option to the underwriters to purchase up to 2,821,138 ADSs to cover over-allotments, if any, on one occasion within 30 days from the date of this prospectus supplement.

 

Neither the U.S. Securities and Exchange Commission nor any state securities commission has approved or disapproved of the ADSs, or determined if this prospectus supplement or the accompanying prospectus are truthful or complete. Any representation to the contrary is a criminal offense.

 

The underwriters expect that delivery of the ADSs will be made to investors on or about February 15, 2011 in book-entry form, through The Depository Trust Company (“DTC”).

 

 

Global coordinator and joint bookrunner

 

J.P. Morgan

 

Joint bookrunners

 

 

February 9, 2011

 

TABLE OF CONTENTS

 

Prospectus Supplement

 

 

Prospectus

 

 

This document consists of two parts. The first part is this prospectus supplement, which describes the specific terms of this offering of ADSs of Ternium S.A. The second part, the accompanying prospectus, dated January 31, 2011, presents more general information about Ternium S.A. and other securities, not offered in this offering, to which the accompanying prospectus also relates. Generally, when we refer only to the “prospectus”, we are referring to both parts combined, and when we refer to the “accompanying prospectus” we are referring to the accompanying prospectus.

 

In this prospectus supplement, unless the context otherwise requires or if otherwise indicated, references to the “Company”, “we”, “us” or “our” refer to Ternium S.A. only and do not include its consolidated subsidiaries and references to “Ternium” are to Ternium S.A. and its consolidated subsidiaries.

 

You should rely only on the information contained in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein. We have not authorized anyone to provide you with information that is different. This document may only be used where it is legal to sell these securities. The information appearing in this prospectus supplement, the accompanying prospectus and the documents incorporated by reference herein and therein may only be accurate as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since such dates. The information in our Annual Report on Form 20-F for the fiscal year ended December 31, 2009, which is incorporated by reference into this prospectus supplement, is updated and supplemented by, and to the extent inconsistent therewith replaced and superseded by, the information in the accompanying prospectus and this prospectus supplement. The information in the accompanying prospectus is supplemented by, and to the extent inconsistent therewith replaced and superseded by, the information in this prospectus supplement.

 

 

 

 

 

The SEC’s rules allow us to “incorporate by reference” information into this prospectus supplement. This means that we can disclose important information to you by referring you to another document. Any information referred to in this way is considered part of this prospectus supplement from the date we file that document. Any reports filed by us with the SEC after the date of this prospectus supplement may, to the extent specified therein, be incorporated by reference into this prospectus supplement and, in such case, will automatically update and, where applicable, supersede any information contained in this prospectus or incorporated by reference in this prospectus supplement (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules).

 

We also incorporate by reference into this prospectus supplement the following documents or information filed or furnished, as appropriate, by us with the SEC:

 

(1) Annual Report on Form 20-F for the fiscal year ended December 31, 2009, filed on June 30, 2010 (the “Annual Report”);

 

(2) Report on Form 6-K, dated January 31, 2011 and filed with the SEC on January 31, 2011 (File No. 001-32734) (the “Interim Report”);

 

(3) Report on Form 6-K, dated February 7, 2011 and filed with the SEC on February 7, 2011 (File No. 001-32734);

 

(4) Registration Statement on Form 8-A dated January 27, 2006, filed on January 27, 2006;

 

(5) Any future annual reports on Form 20-F filed with the SEC after the date of this prospectus and prior to the termination of any offering of the securities offered by this accompanying prospectus; and

 

(6) Our reports on Form 6-K furnished to the SEC after the date of this prospectus supplement only to the extent that the reports expressly state that we incorporate them by reference in this prospectus supplement.

 

We will provide without charge to each person, including any beneficial owner, to whom this prospectus supplement is delivered, upon his or her written or oral request, a copy of any or all documents referred to above which have been or may be incorporated by reference into this prospectus supplement. You may request a copy of these documents by writing or telephoning us at our registered office at the following address:

 

Ternium S.A.

46a, Avenue John F. Kennedy—2^ndFloor

L-1855 Luxembourg

RCS Luxembourg B98668

Attention: Alicia Alvarez

Telephone: (352) 26 68 31 52

 

We maintain an internet site at www.ternium.com. Information contained in or otherwise accessible through this website is not a part of this prospectus supplement. All references in this prospectus supplement to this internet site are inactive textual references to these URLs, or “uniform resource locators” and are for informational reference only. We assume no responsibility for the information contained on this web site.

 

 

 

 

 

This prospectus supplement, the accompanying prospectus and the documents incorporated in this prospectus by reference contain statements which may constitute “forward-looking statements” within the meaning of and subject to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not based on historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control.

 

We use words such as “aim”, “will likely result”, “will continue”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “should”, “will pursue”, “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe” and words and terms of similar substance to identify forward-looking statements, but they are not the only way we identify such statements. All forward-looking statements are management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In addition to the risks related to our business discussed under Item 3.D. “Key Information—Risk Factors” of our Annual Report incorporated into this prospectus by reference, other factors could cause actual results to differ materially from those described in the forward-looking statements. These factors include, but are not limited to:

 

By their nature, certain disclosures relating to these and other risks are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses that may affect our financial condition and results of operations could differ materially from those that have been estimated. You should not place undue reliance on the forward-looking statements, which speak only as of the date they are made. Except as required by law, we are not under any obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

 

Summary

•	Enhance Ternium’s position as a low cost steel producer. We are focused on improving utilization levels of our plants, increasing efficiency and further reducing production costs

	from levels that we already consider to be among the most competitive in the steel industry through, among other measures, capital investments and further integration of our facilities;

•	Pursue strategic growth opportunities. We have a history of strategically growing our businesses through acquisitions and joint ventures. In addition to strongly pursuing organic growth, we intend to identify and actively pursue growth-enhancing strategic opportunities to consolidate Ternium’s presence in its main markets and expand it to the rest of Latin America, gain further access to iron ore and other inputs, expand its offerings of value-added products, increase its steel production, and increase its distribution capabilities;
•	Maximize the benefits arising from Ternium’s broad distribution network. We intend to maximize the benefits arising from Ternium’s broad network of distribution, sales and marketing services to reach customers in major steel markets with a comprehensive range of value-added products and services and to continue to expand its customer base and improve its product mix;
•	Focus on higher margin value-added products. We intend to continue to shift Ternium’s sales mix towards higher margin value-added products, such as cold-rolled sheets and coated and tailor-made products, and services, such as just-in-time delivery and inventory management. In this regard, our Mexican acquisitions in 2005 and 2007 allowed Ternium to expand its offerings of value-added products, such as galvanized products and panels; and
•	Implementing Ternium’s best practices. We believe that the implementation of Ternium’s managerial, commercial and production best practices in acquired new businesses should generate additional benefits and savings. For example, the implementation of Ternium’s cost control procedures and performance analysis in Hylsamex improved control over its production variables and led to cost savings.

•	State-of-the-art and flexible production system, low cost producer. The combination of a portfolio of state-of-the-art, low cost steel production mills, access to diversified sources of raw materials, including proprietary iron ore mines in Mexico, diversified technology base, including blast furnace based, mini-mill based and non-integrated based steel processing facilities, and cost-competitive labor sources makes Ternium a low-cost producer of steel and a cost-competitive producer of value-added products;
•	Strong market position and extensive market reach. Ternium has a leading participation in the market for flat steel products in Mexico and in Argentina. The location of its production facilities gives Ternium favorable access to the most important regional markets in the Americas, including the North American Free Trade Agreement, or NAFTA, and Mercado Común del Sur, or Mercosur; and
•	Experienced and committed management team. Our management team has extensive experience in, and knowledge of, the steel industry, which enhances Ternium’s reputation in the global steel markets. A large percentage of our senior managers have spent their entire careers working within the steel businesses of San Faustín and its affiliates. Our management team has substantial experience in increasing productivity and reducing costs, as well as in identifying, evaluating and pursuing growth opportunities and integrating acquisitions.

Issuer		Ternium S.A.
Selling shareholder		Usiminas Europa A/S
ADSs		Each ADS represents ten of our ordinary shares. See “Description of American Depositary Shares” and “Description of Ordinary Shares” in the accompanying prospectus for further information.

ADSs offered		18,807,590 ADSs

Public Offering Price		USD36.00 per ADS

Concurrent repurchase transaction		Ternium International and Techint will purchase from the selling shareholder on the closing date of this offering a certain number of ordinary shares currently held by the selling shareholder. Ternium International will purchase 41,666,666 ordinary shares for a total consideration of USD150 million, and Techint will purchase 27,777,780 ordinary shares for a total consideration of USD100 million, for a total aggregate consideration of USD250 million. The price per ordinary share of these purchases (gross of the fee referred to in the following paragraph) is equal to one tenth of the public offering price per ADS. These purchases are subject to certain conditions, including the condition that this offering is completed by February 23, 2011.

		Certain fees will be payable by the selling shareholder to us and to our controlling shareholder in connection with this offering and the concurrent repurchase transaction. See “Major shareholders.”

Over-allotment option		The selling shareholder has granted an option to the underwriters to purchase up to 2,821,138 ADSs to cover over-allotments, if any, on one occasion within 30 days from the date of this prospectus supplement.

Use of proceeds		We will not receive any proceeds from the sale of ADSs in this offering.
Listing		The ADSs are listed on the New York Stock Exchange under the symbol “TX”. The codes for the ADSs are 880890108.
ADS depositary		The Bank of New York Mellon

Settlement		Settlement of the ADSs will be made through The Depository Trust Company, or DTC, on or about February 15, 2011.

Lock-up agreements		In connection with this offering, the selling shareholder, we and Techint have entered into lock-up agreements with the underwriters of this offering under which neither the selling shareholder, nor we or Techint may, subject to certain exceptions (including the concurrent repurchase transaction), for a period of 90 days (which may be extended in certain circumstances) after the date of this prospectus supplement, directly or indirectly sell, dispose of or hedge, or file or

		cause to be filed a registration statement with the SEC under the Securities Act of 1933, as amended, or the Securities Act, relating to, any of our ordinary shares or other share capital, including in the form of ADSs, or any securities convertible into or exercisable or exchangeable for any of our ordinary shares or other share capital, including in the form of ADSs, without the prior written consent of the representative of the underwriters.

Issued share capital of the issuer		2,004,743,442 ordinary shares, par value USD1.00 per share (including ordinary shares underlying ADSs).
Voting rights		Each ordinary share (including ordinary shares underlying ADSs) entitles the holder to one vote at the Company’s general shareholders’ meetings. See “Description of Ordinary Shares—Voting Rights; Shareholders’ Meetings; Election of Directors” in the accompanying prospectus. The holders of our ADSs may not attend or directly exercise voting rights in shareholders’ meetings and may instruct the depositary how to exercise the voting rights with respect to the underlying ordinary shares only in accordance with the terms of the deposit agreement. See “Description of American Depositary Shares—Voting Rights” in the accompanying prospectus.
Dividends		We do not have a dividend policy and cannot assure you that we will pay dividends in the future. The holders of ADSs will be entitled to receive dividends or other distributions the depositary receives on our ordinary shares in proportion to the number of underlying ordinary shares that the ADSs represent, subject to deduction of any fees and expenses of the depositary, to deduction of any amounts required to be withheld on account of taxes or other governmental charges and to other conditions and procedures regarding distributions pursuant to the Deposit Agreement. See “Dividend Policy” in our Annual Report, incorporated herein by reference and “Description of American Depositary Shares—Share Dividends and Other Distributions” in the accompanying prospectus.
Taxation		Distributions imputed for tax purposes to newly accumulated profits of the Company (on an unconsolidated basis) are subject to a withholding tax of 15%. The rate of the withholding tax may be reduced pursuant to double tax avoidance treaty existing between Luxembourg and the country of residence of the relevant holder, subject to the fulfillment of the conditions set forth therein. See “Material Luxembourg Tax Considerations For Holders Of Ordinary Shares” in the accompanying prospectus.
		Following the completion of a corporate reorganization, and upon its conversion into an ordinary Luxembourg holding company, the Company recorded a special reserve for tax purposes in a significant amount. The Company expects that dividend distributions for the foreseeable future will be imputed to the special reserve and therefore should be exempt from Luxembourg withholding tax under current Luxembourg law. See “—Recent developments—Corporate reorganization”.

		A U.S. holder of ADRs will be treated, for U.S. federal income tax purposes, as the owner of the shares represented by those ADRs and will not be subject to U.S. federal income tax upon the exchange of shares for ADRs or ADRs for shares. A U.S. holder that is not a tax-exempt entity will be subject to U.S. federal income tax upon the gross amount of any dividends paid out of our current or accumulated earnings and profits on such U.S. holder’s ADSs. If certain holding period and other requirements are satisfied, such dividends generally will be treated as qualified dividend income, which if paid to noncorporate U.S. holders in tax years beginning before January 1, 2013 is taxed at a maximum rate of 15%.
		See “U.S Taxation of Ordinary Shares” and “U.S. Taxation of American Depositary Shares” in the accompanying prospectus.
Risk factors		See “Risk factors” beginning on page S-17, on page 5 of the accompanying prospectus and on page 9 of our Annual Report incorporated herein by reference for a discussion of certain risk factors relating to us, our business and an investment in the ADSs.

in thousands of U.S. dollars		For the nine-month period
(except number of shares and per		ended September 30,								For the year ended December 31,
share data)		2010				2009				2009				2008				2007
Continuing operations
Net sales			5,454,473				3,593,783				4,958,983				8,464,885				5,633,366
Cost of sales			(4,060,783	)			(3,098,633	)			(4,110,370	)			(6,128,027	)			(4,287,671	)
Gross profit			1,393,690				495,150				848,613				2,336,858				1,345,695
Selling, general and administrative expenses			(482,623	)			(393,727	)			(531,530	)			(669,473	)			(517,433	)
Other operating (expenses) income, net			9,186				(21,119	)			(20,700	)			8,662				8,514
Operating income			920,253				80,304				296,383				1,676,047				836,776
Interest expense			(55,249	)			(85,425	)			(105,810	)			(136,111	)			(133,109	)
Interest income			18,177				16,121				21,141				32,178				41,613
Interest income—Sidor financial asset			56,685				95,385				135,952				—				—
Other financial income (expenses), net			91,617				13,836				81,639				(693,192	)			(38,498	)
Equity in earnings (losses) of associated companies			(813	)			928				1,110				1,851				434
Income before income tax expense			1,030,670				121,149				430,415				880,773				707,216
Income tax (expense) benefit:
Current and deferred income tax expense			(354,049	)			23,153				(91,314	)			(258,969	)			(297,838	)
Reversal of deferred statutory profit sharing			—				—				—				96,265				—
Income from continuing operations			676,621				144,302				339,101				718,069				415,871

in thousands of U.S. dollars		For the nine-month period
(except number of shares and per		ended September 30,								For the year ended December 31,
share data)		2010				2009				2009				2008				2007
Discontinued operations
Income from discontinued operations			—				428,023				428,023				157,095				579,925
Net income for the year(1)			676,621				572,325				767,124				875,164				995,796
Attributable to:
Equity holders of the Company			544,569				558,116				717,400				715,418				784,490
Non-controlling interest			132,052				14,209				49,724				159,746				211,306
			676,621				572,325				767,124				875,164				995,796
Depreciation and amortization			280,020				285,291				385,105				413,541				355,271
Weighted average number of shares outstanding(3)			2,004,743,442				2,004,743,442				2,004,743,442				2,004,743,442				2,004,743,442
Basic earnings per share (expressed in USD per share) for profit:(1)(2)(3)
From continuing operations attributable to the equity holders of the Company			0.27				0.07				0.15				0.27				0.15
From discontinued operations attributable to the equity holders of the Company			—				0.21				0.21				0.09				0.24
For the year attributable to the equity holders of the Company			0.27				0.28				0.36				0.36				0.39
Dividends per share declared			—				—				0.05				—				0.05

(1)		International Accounting Standard N° 1 (IAS 1) (Revised) requires that income for the year as shown in the income statement includes the portion attributable to non-controlling interest. Basic earnings per share, however, continue to be calculated on the basis of income attributable solely to the equity holders of the Company.
(2)		Basic earnings per share (expressed in USD per share), equals diluted earnings per share in 2009, 2008 and 2007.
(3)		For each of fiscal years 2009, 2008 and 2007 the weighted average of shares outstanding totaled 2,004,743,442 shares.

		As of
in thousands of U.S. dollars		September 30,				As of December 31,
(except number of shares)		2010				2009				2008				2007
Non-current assets			5,461,285				5,250,135				5,491,408				8,553,123
Property, plant and equipment, net			4,214,239				4,040,415				4,212,313				6,776,630
Other non-current assets(1)			1,247,046				1,209,720				1,279,095				1,776,493
Current assets			5,630,508				5,042,538				5,179,839				5,095,959
Cash and cash equivalents			2,227,001				2,095,798				1,065,552				1,125,830
Other current assets			3,393,361				2,937,494				4,108,954				3,200,987
Non-current assets classified as held for sale			10,146				9,246				5,333				769,142
Total assets			11,091,793				10,292,673				10,671,247				13,649,082
Capital and reserves attributable to the Company’s equity holders(2)			5,784,299				5,296,342				4,597,370				4,452,680
Non-controlling interest			1,108,031				964,897				964,094				1,805,243
Non-current liabilities			2,511,748				2,872,667				3,374,964				5,401,549
Borrowings			1,420,618				1,787,204				2,325,867				3,676,072
Deferred income tax			844,244				857,297				810,160				1,327,768
Other non-current liabilities			246,886				228,166				238,937				397,709
Current liabilities			1,687,715				1,158,767				1,734,819				1,989,610
Borrowings			509,674				539,525				941,460				406,239
Other current liabilities			1,178,041				619,242				793,359				1,369,608
Liabilities directly associated with non-current assets classified as held for sale			—				—				—				213,763
Total liabilities			4,199,463				4,031,434				5,109,783				7,391,159
Total equity and liabilities			11,091,793				10,292,673				10,671,247				13,649,082
Number of shares outstanding			2,004,743,442				2,004,743,442				2,004,743,442				2,004,743,442

(1)		As of September 30, 2010, December 31, 2009, 2008 and 2007, includes goodwill related to the acquisition of our Mexican subsidiaries for a total amount of USD741.6, USD708.6, USD683.7 and USD850.7 million, respectively.
(2)		The Company’s common stock as of each of September 30, 2010, December 31, 2009, 2008 and 2007 was represented by 2,004,743,442, shares, with a par value of USD1.00 per share, for a total amount of USD2,004.7 million.

		For the nine-month period ended September 30,								For the year ended December 31,
in USD millions (unless otherwise specified)		2010				2009				2009				2008				2007
Net cash provided by operating activities			581.395				1,089.203				1,161,758				517,513				936,418
Net cash provided by (used in) investment activities			224.925				543.354				791,233				350,530				(1,802,317	)
Net cash used in financing activities			(675.551	)			(811.540	)			(922,588	)			(752,909	)			1,359,046
Net Sales:
Flat steel product sales
South and Central America			2,087.9				1,170.2				1,717.1				2,782.5				2,037.0
North America			2,605.1				1,755.5				2,371.9				4,294.7				2,571.8
Europe and other			15.4				154.5				161.0				47.5				123.0
Total flat steel products sales			4,708.3				3,080.2				4,250.0				7,124.7				4,731.7
Long steel product sales
South and Central America			115.8				37.4				57.3				274.2				70.0
North America			470.0				387.4				512.0				791.8				696.0
Europe and Other			18.7				2.0				3.5				8.9				6.9
Total long steel product sales			604.5				426.8				572.9				1,075.1				772.8
Other products			141.6				86.8				136.1				265.1				128.8
Total product sales			5,454.5				3,593.8				4,959.0				8,464.9				5,633.4
Shipments (in thousands of tonnes):
Flat steel product sales
South and Central America			748.2				513.8				1,904				2,604				2,499
North America			909.2				872.8				3,115				3,666				3,035
Europe and Other			4.9				25.3				287				55				185
Total flat steel products sales			1,662.3				1,411.9				5,305				6,326				5,719
Long steel product sales
South and Central America			72.7				26.3				118				302				133
North America			247.6				244.6				931				901				1,113
Europe and Other			26.6				—				6				13				15
Total long steel product sales			347.0				271.0				1,056				1,217				1,261
Total product sales			2,009.3				1,682.8				6,980				7,543				6,361
Net sales/tonne (in USD millions/ tonne):
Flat steel product sales
South and Central America			1,037				863				902				1,069				815
North America			925				747				761				1,171				847
Europe and Other			539				616				561				864				665
Total flat steel products sales			974				787				801				1,126				827
Long steel product sales
South and Central America			639				478				486				908				526
North America			620				548				550				879				625
Europe and Other			635				—				583				685				460
Total long steel product sales			625				541				543				883				613
Total product sales			914				747				710				1,122				886
Other information
Number of employees (at period end)			—				—				13,879				14,792				14,638

 

We have set forth risk factors in our Annual Report incorporated herein by reference. We have also set forth below an additional risk factors related to developments since our Annual Report. You should carefully consider all these risk factors in addition to the other information contained or incorporated by reference in this prospectus supplement and accompanying prospectus before making an investment decision regarding the ADSs.

 

Risks relating to the ADSs

 

Future sales of shares by us and our shareholders may depress the price of our ADSs.

 

Future sales of substantial amounts of our ordinary shares, or the perception that such future sales may occur, may depress the price of our ADSs. Neither our shareholders (other than Techint and the selling shareholder) nor our directors and officers will be subject to any lock-up agreements in connection with the offering. As a result, they will be able to freely transfer their ADSs immediately following the offering. In particular, the selling shareholder has announced its intention to sell all of the ordinary shares it currently owns. Should the selling shareholder continue to hold any ordinary shares following the closing of the offering and the concurrent repurchase transaction, the selling shareholder may (subject to the provisions of the underwriting agreement in connection with this offering and its existing agreements with the Company and Techint) sell such ordinary shares in the form of ADSs at any time following the applicable lock-up period. See “Underwriting.” Any such sale by the selling shareholder or other shareholder may lead to a decline in the price of our ADSs. We cannot assure you that the price of our ADSs would recover from any such decline in value.

 

We will not receive any proceeds from the sale of ADSs in this offering.

 

The following table sets forth Ternium’s consolidated capitalization as of September 30, 2010. This table was prepared in accordance with IFRS. You should read this table in conjunction with the financial statements and other financial information included and incorporated by reference in this prospectus supplement and the accompanying prospectus that were prepared in accordance with IFRS.

 

 

 

Ternium International has agreed to purchase shares from the selling shareholder in a concurrent repurchase transaction for a total consideration of USD150 million. In connection with such concurrent repurchase transaction, the selling shareholder will pay us a fee of USD10.2 million upon closing of the offering. See “Major shareholders.”

 

The following table shows the beneficial ownership of our securities (in the form of shares or ADSs) based on the information most recently available to the Company, as of January 31, 2011, by (1) the Company’s major shareholders (persons or entities that own beneficially 5% or more of the Company’s shares) and (2) shares held by our directors and senior management as a group, and the non-affiliated public shareholders, as well as the beneficial ownership of such shareholders adjusted to reflect the offering and the concurrent repurchase transaction.

 

 

 

 

Ternium International and Techint will purchase from the selling shareholder on the closing date of this offering a certain number of ordinary shares currently held by the selling shareholder. Ternium International will purchase 41,666,666 ordinary shares for a total consideration of USD150 million, and Techint will purchase 27,777,780 ordinary shares for a total consideration of USD100 million, for a total aggregate consideration of USD250 million. The price per ordinary share of these purchases (gross of the fee described below) is equal to one tenth of the offer price per ADS. These purchases are subject to certain conditions, including the condition that this offering is completed by February 23, 2011.

 

18,807,590 ADSs representing ordinary shares currently held by the selling shareholder that will not be sold in the concurrent repurchase transaction are being offered hereby at a public offering price of USD36.00 per ADS.

 

The selling shareholder has agreed to pay a fee of USD13 million to a subsidiary of Techint upon completion of the offer in consideration for Techint’s agreement to waive its right of first refusal over sales of our ordinary shares by the selling shareholder in connection with this offering and subject to certain terms and conditions. In addition, the selling shareholder has agreed to pay us and the Techint subsidiary an aggregate fee of USD17 million upon the closing of this offering, which will be divided pro rata based on the relative purchases made by Ternium International and Techint in the concurrent repurchase transaction. Accordingly, we will receive a fee of USD10.2 million and the Techint subsidiary will receive a fee of USD6.8 million upon the closing of this offering. Furthermore, the selling shareholder has agreed to reimburse all of the Company’s and Techint’s reasonable expenses related to this offering and the concurrent repurchase transaction.

 

The selling shareholder has agreed with us and our controlling shareholder that, upon the closing of the offering, the rights of the selling shareholder under the Shareholders Agreement, dated July 20, 2005, among the selling shareholder and our controlling shareholder, will cease to exist and the selling shareholder will cause the directors on our board who had been nominated by it (i.e., Messrs Brumer and Seckelmann) to resign. Following the closing of this offering (regardless of whether the underwriters’ over-allotment option is exercised) and the purchases by Ternium International and Techint described above, Usiminas will beneficially own less than 5% of the Company’s shares and, accordingly, the Shareholders Agreement will terminate.

 

The selling shareholder is offering the ADSs described in this prospectus supplement and accompanying prospectus through the underwriters named below. J.P. Morgan Securities LLC is acting as representative for the underwriters in this offering. Subject to the terms and conditions of the underwriting agreement dated the date of this prospectus supplement, the selling shareholder has agreed to sell to the underwriters, and each underwriter has severally agreed to purchase, at the public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus supplement, the number of ADSs, listed next to its name in the following table:

 

 

The underwriting agreement provides that the obligations of the underwriters are subject to certain conditions precedent, including the absence of any material adverse change in our business and the receipt of certain certificates, opinions and letters from us, our and the selling shareholder’s counsel and our independent auditors. The underwriters are committed to purchase all the ADSs offered by the selling shareholder in this public offering if they purchase any ADSs (other than those covered by the underwriters’ over-allotment option described below). The underwriting agreement provides that, if an underwriter defaults, the purchase commitments of non-defaulting underwriters may be increased or the offering may be terminated.

 

The selling shareholder has granted to the underwriters an option to purchase up to 2,821,138 ADSs to cover over-allotments. The underwriters have 30 days from the date of this prospectus supplement to exercise this over-allotment option. If any ADSs are purchased with this over-allotment option, the underwriters will purchase ADSs in approximately the same proportion as shown in the table above.

 

The underwriters propose to offer the ADSs directly to the public at the public offering price set forth on the cover page of this prospectus supplement and to certain dealers at that price less a concession not in excess of USD0.44928 per ADS. After the initial public offering of the ADSs, the underwriters may change the offering price and other selling terms. The representative has advised us that the underwriters do not intend to confirm discretionary sales in excess of 5% of the ADSs offered in the offering.

The following table shows the per ADS and total underwriting discounts and commissions to be paid to the underwriters by the selling shareholder in connection with the offering assuming both no exercise and full exercise of the underwriters’ overallotment option:

 

 

The selling shareholder estimates that its total expenses for the offering and the concurrent repurchase transaction will be approximately USD2,925,000. All of our expenses related to this offering and the concurrent repurchase transaction will be borne by the selling shareholder.

 

A prospectus in electronic format may be made available on the web sites maintained by one or more underwriters, or selling group members, if any, participating in the offering. The underwriters may agree to allocate a number of ADSs to underwriters and selling group members for sale to their online brokerage account holders. Internet distributions will be allocated by the representative to underwriters and selling group members that may make Internet distributions on the same basis as other allocations.

 

We, Techint and the selling shareholder have each agreed with the underwriters prior to the commencement of this offering that, with limited exceptions, for a period of 90 days after the date of this prospectus supplement, we, Techint and the selling shareholder may not, without the prior written consent of the representative of the underwriters:

 

 

whether any such transaction described in the bullet points above is to be settled by delivery of any ordinary shares or other capital stock (including in the form of ADSs) or any securities convertible into or exercisable or exchangeable for any ordinary shares or other capital stock (including in the form of ADSs) or such other securities, in cash or otherwise. In addition, in the event that either (1) during the last 17 days of the “lock-up” period, we release earnings results or material news or a material event relating to us occurs or (2) prior to the expiration of the “lockup” period, we announce that we will release earnings results during the 16-day period beginning on the last day of the “lock-up” period, then in either case the expiration of the “lock-up” will be extended until the expiration of the 18-day period beginning on the date of the release of the earnings results or the occurrence of the material news or event, as applicable. These restrictions do not apply to us when using our ordinary shares, including in

the form of ADSs, as consideration in any acquisition we seek to consummate. These restrictions do not apply to the selling shareholder in connection with ordinary shares sold in the concurrent repurchase transaction. In addition, these restrictions do not apply to sales by Techint in transactions meeting the requirements of Rule 144 under the Securities Act.

 

The representative has no current intent or arrangement to release any of the share capital subject to the lock-up agreements prior to the expiration of the 90-day lock-up period. There are no specific criteria for the waiver of lock-up restrictions, and the representative may not in advance determine the circumstances under which a waiver might be granted. Any waiver will depend on the relevant facts and circumstances existing at the time. Among the factors that the representative may consider in deciding whether to release shares are the length of time before the lock-up period expires, the number of shares involved, the reason for the requested release, market conditions, the trading price of our ADSs, historical trading volumes of our ADSs, and whether the person seeking the release is a director, officer or affiliate of our company. The representative will not consider their own positions in our shares, if any, in determining whether or not to consent to a waiver of a lock-up agreement.

 

We and the selling shareholder have agreed to indemnify the underwriters against certain liabilities, including liabilities under the Securities Act.

 

The ADSs are listed on the New York Stock Exchange under the symbol “TX.”

 

In connection with the offering, the underwriters may engage in stabilizing transactions, which involves making bids for, purchasing and selling ADSs in the open market for the purpose of preventing or retarding a decline in the market price of the ADSs while this offering is in progress. These stabilizing transactions may include making short sales of the ADSs, which involves the sale by the underwriters of a greater number of ADSs than the number of ADSs they are required to purchase in this offering, and purchasing ADSs on the open market to cover positions created by short sales. Short sales may be “covered” shorts, which are short positions in an amount not greater than the underwriter’s over-allotment option referred to above, or may be “naked” shorts, which are short positions in excess of that amount. The underwriters may close out any covered short position either by exercising their over-allotment option, in whole or in part, or by purchasing shares in the open market. In making this determination, the underwriters will consider, among other things, the price of ADSs available for purchase in the open market compared to the price at which the underwriter may purchase ADSs through the over-allotment option. A naked short position is more likely to be created if the underwriters are concerned that there may be downward pressure on the price of the ADSs in the open market that could adversely affect investors who purchase in this offering. To the extent that the underwriters create a naked short position, they will purchase ADSs in the open market to cover the position.

 

The underwriters have advised us that, pursuant to Regulation M of the Securities Act, they may also engage in other activities that stabilize, maintain or otherwise affect the price of the ADSs, including the imposition of penalty bids. This means that if the underwriters purchase ADSs in the open market in stabilizing transactions or to cover short sales, the underwriters may be required to repay the underwriting discount received by them.

 

These activities may have the effect of raising or maintaining the market price of the ADSs or preventing or retarding a decline in the market price of the ADSs, and, as a result, the price of the ADSs may be higher than the price that otherwise might exist in the open market. If the underwriters commence these activities, they may discontinue them at any time. The

underwriters may carry out these transactions on the New York Stock Exchange, in the over-the-counter market or otherwise.

 

This prospectus supplement and the accompanying prospectus do not constitute an offer or an invitation by or on behalf of our company, the selling shareholder or the underwriters to subscribe for or purchase any ADSs in any jurisdiction to any person to whom it is unlawful to make such an offer or solicitation in that jurisdiction. The distribution of this prospectus supplement and the accompanying prospectus and the offering of the ADSs in certain jurisdictions may be restricted by law. We, the selling shareholder and the underwriters require persons into whose possession this prospectus supplement and the accompanying prospectus come to inform themselves about and to observe any such restrictions.

 

In relation to each Member State of the European Economic Area which has implemented the Prospectus Directive (each, a “Relevant Member State”), no offer of the ADSs to the public in that Relevant Member State may be made prior to the publication of a prospectus in relation to the ADSs which has been approved by the competent authority in that Relevant Member State or, where appropriate, approved in another Relevant Member State and notified to the competent authority in that Relevant Member State, all in accordance with the Prospectus Directive, except that, an offer of the ADSs may be made to the public in that Relevant Member State at any time:

 

 

provided that no such offer of ADSs shall require the underwriters or us to publish a prospectus pursuant to Article 3 of the Prospectus Directive.

 

For the purposes of this provision, the expression an “offer of shares to the public” in relation to any ADSs in any Relevant Member State means the communication in any form and by any means of sufficient information on the terms of the offer and any ADSs to be offered so as to enable an investor to decide to purchase or subscribe the ADSs, as the same may be varied in that Relevant Member State by any measure implementing the Prospectus Directive in that Relevant Member State, and the expression “Prospectus Directive” means Directive 2003/71/EC (and amendments thereto, including the 2010 Prospectus Directive Amending Directive, to the extent implemented in the Relevant Member State) and includes any relevant implementing measure in each Relevant Member State and the expression “2010 Amending Directive” means Directive 2010/73/EC.

 

This document is only being distributed to, and is only directed at, persons in the United Kingdom that are also (1) investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the “Order”) or (2) high net worth entities, and other persons falling within Article 49(2)(a) to (d) of the Order (all such persons together being referred to as “relevant persons”). This prospectus and its contents are confidential and should not be distributed, published or reproduced (in whole or in part) or disclosed by recipients to any other persons in the United Kingdom. Any person in the United Kingdom that is not a relevant person should not act or rely on this document or any of its contents. Any investment or investment

activity to which this document relates is available in the United Kingdom only to relevant persons, and will be engaged in only with such persons.

 

The ADSs and/or ordinary shares of the Company have not been, and will not be, registered with the Comissão de Valores Mobiliários (Brazilian Securities Commission). The ADSs and/or ordinary shares of the Company have not been offered or sold, and will not be offered or sold in Brazil, except in circumstances that do not constitute a public offering or distribution under Brazilian laws and regulations.

 

The ADSs and/or ordinary shares will not be registered under Law 18,045, as amended, of Chile with the Superintendencia de Valores y Seguros (Chilean Securities Commission), and accordingly, they may not be offered to persons in Chile except in circumstances that do not constitute a public offering under Chilean law.

 

Relationships with the underwriters

 

The underwriters and their respective affiliates have provided in the past to us and our affiliates and to the selling shareholder and its affiliates and may provide from time to time in the future certain commercial banking, financial advisory, investment banking and other services for us and our affiliates, the selling shareholder and its affiliates in the ordinary course of their business, for which they have received and may continue to receive customary fees and commissions. In particular, affiliates of Citigroup Global Markets Inc. are lenders under the term loan facility of Ternium Mexico S.A. de C.V., dated July 12, 2007, as amended on July 18, 2007 and on November 18, 2008. In addition, from time to time, the underwriters and their respective affiliates may effect transactions for their own account or the account of customers, and hold on behalf of themselves or their customers, long or short positions in our debt or equity securities or loans, and may do so in the future.

 

The addresses for the underwriters are J.P. Morgan Securities LLC, 383 Madison Avenue, New York, New York 10179; BTG Pactual US Capital Corp., 601 Lexington Avenue, 57th floor, New York, New York 10022; Citigroup Global Markets Inc., 388 Greenwich Street, New York, New York 10013; Merrill Lynch, Pierce, Fenner & Smith Incorporated, One Bryant Park, New York, New York 10036; and Morgan Stanley & Co. Incorporated, 1585 Broadway, New York, New York 10036.

 

Expenses of the offering

 

The selling shareholder is expected to incur the following estimated expenses in connection with this offering:

 

 

The validity of the ordinary shares and certain other legal matters governed by Luxembourg law will be passed upon for us by Elvinger, Hoss & Prussen, 2, Place Winston Churchill, B.P. 425, L-2014, Luxembourg, our Luxembourg counsel. We are also being represented as to U.S. matters by Sullivan & Cromwell LLP. Certain U.S. legal matters in connection with this offering will be passed upon by Simpson Thacher & Bartlett LLP, U.S. counsel for the underwriters. Certain legal matters as to Argentine and Mexican law will be passed upon by Fernando Duelo Van Deusen, General Counsel of the Company. In addition, Michael H. Steffensen, Danish counsel to the selling shareholder, will pass upon certain matters of Danish law; Mayer Brown LLP, U.S. counsel to the selling shareholder, will pass upon certain matters of U.S. law; and Tauil & Chequer Advogados Associado ao Mayer Brown LLP, Brazilian counsel to the selling shareholder, will pass upon certain matters of Brazilian law.

PROSPECTUS

 

 

Ternium S.A.

 

RCS Luxembourg

B 98668

 

Debt Securities

Debt Warrants

Ordinary Shares

American Depositary Shares representing Ordinary Shares

 

From time to time and subject to our articles of association and applicable law, we may offer, issue and sell debt securities, debt warrants, ordinary shares and American Depositary Shares (“ADSs”) representing ordinary shares in one or more offerings. This prospectus may also be used by a selling security holder to sell securities from time to time.

 

This prospectus describes some of the general terms that may apply to these securities and the general manner in which they may be offered. When securities are offered under this prospectus, we will provide a prospectus supplement describing the specific terms of any securities to be offered, and the specific manner in which they may be offered, including the amount and price of the offered securities. The prospectus supplement may also add, update or change information contained in this prospectus. If any securities are to be sold by selling security holders, information concerning the security holders will be included in a supplement or supplements to this prospectus. The prospectus supplement may also incorporate by reference certain of our filings with the Securities and Exchange Commission. This prospectus may not be used unless accompanied by a prospectus supplement or the applicable information is included in our filings with or submissions to the Securities and Exchange Commission. You should carefully read this prospectus and any prospectus supplement, together with any documents incorporated by reference, before you invest in any of our securities.

 

Our ADSs are listed on the New York Stock Exchange (“NYSE”) and trade under the ticker symbol “TX”. Our ordinary shares are listed not for trading but only in connection with the registration of ADSs, which are evidenced by American Depositary Receipts (“ADRs”). Our headquarters are located at 46a, Avenue John F. Kennedy — 2nd floor, L-1855 Luxembourg, and our telephone number is +(352) 26 68 31 52.

 

We and/or the selling security holders may offer and sell the securities directly to purchasers, through underwriters, dealers or agents, or through any combination of these methods, on a continuous or delayed basis. If securities are sold by selling security holders, we will not receive any proceeds from such sale.

 

Investing in our securities involves risks. You should carefully consider the “Risk Factors” beginning on page 5 of this prospectus, the “Risk Factors” beginning on page 9 of our annual report on Form 20-F for the fiscal year ended December 31, 2009, filed with the Securities and Exchange Commission on June 30, 2010, or the risk factors included in any subsequent annual report on Form 20-F that we file, as well as the risk factors included in the applicable prospectus supplement.

 

Neither the Securities and Exchange Commission nor any other regulatory body has approved or disapproved of these securities or passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.

 

 

Prospectus dated January 31, 2011.

 

TABLE OF CONTENTS

 

 

In this prospectus, unless the context otherwise requires or if otherwise indicated, references to the “Company”, “we”, “us” or “our” refer to Ternium S.A. only and do not include its consolidated subsidiaries and references to “Ternium” are to Ternium S.A. and its consolidated subsidiaries.

 

This prospectus is part of a registration statement that we filed with the U.S. Securities and Exchange Commission (the “SEC”), using a “shelf” registration process. Under this shelf process, the securities covered by this prospectus may be sold in one or more offerings. Each time we or any selling security holder offers securities under the registration statement, we will provide a prospectus supplement that will contain specific information about the terms of that offering. The prospectus supplement may also add, update or change information contained in this prospectus. Before you invest in any securities offered under this prospectus, you should read this prospectus and the applicable prospectus supplement together with the additional information described under the heading “Available Information.” The registration statement that contains this prospectus (including the exhibits to the registration statement) contains additional information about us and the securities offered under this prospectus. Statements contained in this prospectus and the applicable prospectus supplement about the provisions or content of any agreement or other document are only summaries. If SEC rules require that any agreement or document be filed as an exhibit to the registration statement, you should refer to that agreement or document for its complete contents. That registration statement can be read at the SEC website or at the SEC offices mentioned under the heading “Available Information.”

 

You should rely only on the information contained or incorporated by reference in this prospectus, any related free writing prospectus or the applicable prospectus supplement. We have not authorized anyone else to provide you with additional or different information. This prospectus may only be used to sell securities if it is accompanied by a prospectus supplement or the applicable information is included in our filings or submissions to the SEC. This prospectus may only be used where it is legal to offer and sell these securities. You should not assume that the information contained or incorporated by reference in this prospectus, the applicable prospectus supplement or any other offering material is accurate as of any date other than the dates on the front of those documents.

 

We are subject to the information requirements of the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), applicable to a foreign private issuer and, accordingly, file or furnish reports, including annual reports on Form 20-F, reports on Form 6-K, and other information with the SEC. You may read and copy any documents filed by us at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on the public reference room. Our filings with the SEC are also available to the public through the SEC’s internet site at http://www.sec.gov and through the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

 

We have filed with the SEC a registration statement on Form F-3 relating to the securities covered by this prospectus. This prospectus is a part of the registration statement and does not contain all of the information in the registration statement. Whenever a reference is made in this prospectus to a contract or other document of ours, please be aware that the reference is only a summary and that you should refer to the exhibits that are a part of the registration statement for a copy of the contract or other document. You may review a copy of the registration statement at the SEC’s public reference room in Washington, D.C., as well as through the SEC’s internet site.

 

The SEC’s rules allow us to “incorporate by reference” information into this prospectus. This means that we can disclose important information to you by referring you to another document. Any information referred to in this way is considered part of this prospectus from the date we file that document. Any reports filed by us with the SEC after the date of this prospectus will be incorporated by reference into this prospectus and will automatically update and, where applicable, supersede any information contained in this prospectus or incorporated by reference in this prospectus (other than, in each case, documents or information deemed to have been furnished and not filed in accordance with SEC rules).

We also incorporate by reference into this prospectus the following documents or information filed or furnished, as appropriate, by us with the SEC:

 

(1) Registration Statement on Form 8-A dated January 27, 2006 filed on January 27, 2006;

 

(2) Annual Report on Form 20-F for the fiscal year ended December 31, 2009, filed on June 30, 2010 (the “Annual Report”);

 

(3) Report on Form 6-K, dated January 31, 2011;

 

(4) Any future annual reports on Form 20-F filed with the SEC after the date of this prospectus and prior to the termination of any offering of the securities offered by this prospectus (including any supplement hereto); and

 

(5) Our reports on Form 6-K furnished to the SEC after the date of this prospectus only to the extent that the reports expressly state that we incorporate them by reference in this prospectus.

 

We will provide without charge to each person, including any beneficial owner, to whom this prospectus is delivered, upon his or her written or oral request, a copy of any or all documents referred to above which have been or may be incorporated by reference into this prospectus. You may request a copy of these documents by writing or telephoning us at our registered office at the following address:

 

Ternium S.A.

46a, Avenue John F. Kennedy — 2nd Floor
L-1855 Luxembourg
Attention: Alicia Alvarez
Telephone: (352) 26 68 31 52

 

We maintain an internet site at www.ternium.com. Information contained in or otherwise accessible through this website is not a part of this prospectus. All references in this prospectus to this internet site are inactive textual references to these URLs, or “uniform resource locators” and are for informational reference only. We assume no responsibility for the information contained on this web site.

 

This prospectus, the accompanying prospectus supplement and the documents incorporated in this prospectus by reference contain statements which may constitute “forward-looking statements” within the meaning of and subject to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not based on historical facts but instead represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control.

 

We use words such as “aim”, “will likely result”, “will continue”, “contemplate”, “seek to”, “future”, “objective”, “goal”, “should”, “will pursue”, “anticipate”, “estimate”, “expect”, “project”, “intend”, “plan”, “believe” and words and terms of similar substance to identify forward-looking statements, but they are not the only way we identify such statements. All forward-looking statements are management’s present expectations of future events and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. In addition to the risks related to our business discussed under Item 3.D. “Key Information — Risk Factors” of our Annual Report incorporated in this prospectus by reference, other factors could cause actual results to differ materially from those described in the forward-looking statements. These factors include, but are not limited to:

 

 

 

By their nature, certain disclosures relating to these and other risks are only estimates and could be materially different from what actually occurs in the future. As a result, actual future gains or losses that may affect our financial condition and results of operations could differ materially from those that have been estimated. You should not place undue reliance on the forward-looking statements, which speak only as of the date they are made. Except as required by law, we are not under any obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise.

 

We are a public limited liability company (société anonyme) organized under the laws of the Grand-Duchy of Luxembourg on December 22, 2003. Our registered office is located at 46a, Avenue John F. Kennedy, 2nd Floor, L-1855, Luxembourg, telephone (352) 26 68 31 52. Our agent for U.S. federal securities law purposes is Ternium International U.S.A. Corporation, located at 2200 West Loop South, 8th Floor, Houston, TX 77027, United States.

 

Ternium is a leading steel producer in Latin America, manufacturing and processing a wide range of flat and long steel products for customers active in the construction, home appliances, capital goods, container, food, energy and automotive industries. Ternium believes that it is a competitive steel producer due to its proximity to customers and high-quality raw material sources, state-of-the-art and flexible production facilities and downstream integration into value-added steel products.

 

Ternium produces and distributes mainly finished and semi-finished flat and long steel products which are sold either directly to steel processors or to end-users, after different value-adding processes. Flat steel products include slabs (steel in its basic, semi-finished state), hot-rolled coils and sheets, cold-rolled coils and sheets, tin plate, hot dipped galvanized and electrogalvanized sheets and pre-painted sheets. Long steel products include billets (steel in its basic, semi-finished state), wire rod and bars.

 

Ternium has steel production facilities, service centers and distribution centers, in North, Central and South America and iron ore mining operations in North America. Ternium primarily sells its flat and long steel products in the regional markets of the Americas where it can leverage its strategically located manufacturing facilities to provide specialized products and delivery services to its clients and reduce freight costs. We believe that Ternium is the leading supplier of flat steel products in Mexico, the leading supplier of flat steel products in Argentina, and a competitive player in the international steel market for flat and long steel products. Through its network of commercial offices in several countries in Latin America, the United States and Spain, Ternium maintains an international presence that allows it to reach customers outside its local markets, achieve improved effectiveness in the supply of its products and in the procurement of semi-finished steel, and maintain a fluid commercial relationship with its customers by providing continuous services and assistance.

 

We have set forth risk factors in our Annual Report, which is incorporated by reference in this prospectus. Prospective investors should carefully consider all of the risks factors set forth therein. Prospective investors in ADSs should particularly consider the risk factors included in our Annual Report under the caption “Risk Factors — Risks Relating to our ADSs”. We have also set forth below certain additional risk factors that relate specifically to debt securities or shares we may offer using this prospectus. We may include further risk factors in future reports on Form 6-K incorporated in this prospectus by reference, or in any prospectus supplement. You should carefully consider all these risk factors in addition to the other information presented or incorporated by reference in this prospectus before deciding to invest in our securities.

 

Risks Relating to our Debt Securities

 

There may not be a liquid trading market for our debt securities, which could limit your ability to sell your debt securities in the future.

 

If a liquid market for our debt securities does not develop, the price of our debt securities and the ability of a holder of our debt securities to resell such debt securities may be limited. Even if a secondary market for our debt securities develops, it may not provide significant liquidity and we expect transaction costs would be high.

 

Creditors of our subsidiaries will have priority over the holders of our debt securities in claims to assets of our subsidiaries.

 

The debt securities will be obligations of the Company. We conduct all of our operations and hold substantially all of our assets through our subsidiaries. Claims of creditors of our subsidiaries, including trade creditors and bank and other lenders, will have priority over the holders of our debt securities in claims to assets of our subsidiaries. In addition, our ability to meet our obligations, including obligations under the debt securities, will depend, in significant part, on our receipt of cash dividends, advances and other payments from our subsidiaries.

 

Judgments of Luxembourg courts enforcing our obligations under the debt securities would be payable only in a currency of legal tender in Luxembourg.

 

If proceedings were brought in Luxembourg seeking to enforce in Luxembourg our obligations in respect of debt securities, we would be required to discharge our obligations in Luxembourg in a currency of legal tender in Luxembourg. Under Luxembourg law, an obligation denominated in a currency which is not of legal tender in Luxembourg will be enforceable in a currency of legal tender in Luxembourg. As a result, the amount paid by us in a currency of legal tender in Luxembourg may not be readily convertible into the amount of U.S. dollars that we are obligated to pay under the indenture for our debt securities. However, any exchange losses incurred by the holders of our debt securities should be recoverable under Luxembourg law.

 

Luxembourg insolvency laws may adversely affect a recovery by the holders of the debt securities.

 

Under Luxembourg law, if we were declared bankrupt, our obligations under the debt securities:

 

 

Certain Luxembourg corporate law provisions do not apply to our debt securities.

 

As permitted by Luxembourg corporate law with respect to debt securities issued by a Luxembourg company under a law other than Luxembourg law, the debt securities will not be subject to the provisions of articles 86 to 94-8 of the Luxembourg law of 10th August 1915 on commercial companies, as amended (the “Luxembourg Companies

Law”) regarding bondholders’ rights. Accordingly, holders of our debt securities would not benefit from such provisions.

 

Risks Relating to our Shares

 

In deciding whether to purchase, hold or sell shares, you may not have access to as much information about us as you would in the case of a U.S. company.

 

There may be less publicly available information about us than is regularly published by or about U.S. issuers. Also, Luxembourg corporate and securities regulations governing Luxembourg companies may not be as extensive as those in effect in the United States, and Luxembourg law and regulations in respect of corporate governance matters might not be as protective of minority shareholders as state corporation laws in the United States. Furthermore, IFRS, the accounting standards in accordance with which we prepare our consolidated financial statements, differ in certain material aspects from U.S. GAAP.

 

Holders of shares in the United States may not be able to exercise preemptive rights in certain cases.

 

Pursuant to Luxembourg corporate law, existing shareholders of the Company are generally entitled to preemptive subscription rights in the event of capital increases and issues of shares against cash contributions. Under the Company’s articles of association, the board of directors has been authorized to waive, limit or suppress such preemptive subscription rights until July 15, 2015. The Company may, however, issue shares without preemptive rights only in connection with any issuance of shares for, within, in conjunction with or related to an initial public offering of the Company’s shares on one or more regulated markets (in one or more instances), or if the newly-issued shares are issued for consideration other than cash, or are issued to directors, officers, agents or employees of the Company, its direct or indirect subsidiaries or its affiliates, or are issued upon conversion of convertible bonds or other instruments convertible into shares (provided, however, that the preemptive subscription rights of the then existing shareholders will apply in connection with any issuance of convertible bonds or other instruments convertible into shares). We intend to evaluate, at the time of any rights offering, the costs and potential liabilities associated with the exercise by holders of shares of the preemptive rights for shares, and any other factors we consider appropriate at the time, and then to make a decision as to whether to register additional shares.

 

It may be difficult to enforce judgments against us in U.S. courts.

 

The Company is a corporation organized under the laws of Luxembourg, and most of its assets are located outside the United States. Furthermore, most of the Company’s directors and officers named in our annual report reside outside the United States. As a result, investors may not be able to effect service of process within the United States upon us or our directors or officers or to enforce against us or them in U.S. courts judgments predicated upon the civil liability provisions of U.S. federal securities law. Likewise, it may be difficult for a U.S. investor to bring an original action in a Luxembourg court predicated upon the civil liability provisions of the U.S. federal securities laws against the Company, directors and officers. There is also uncertainty with regard to the enforceability of original actions in courts outside the United States of civil liabilities predicated upon the civil liability provisions of U.S. federal securities laws. Furthermore, the enforceability in courts outside the United States of judgments entered by U.S. courts predicated upon the civil liability provisions of U.S. federal securities law will be subject to compliance with procedural requirements under applicable local law, including the condition that the judgment does not violate the public policy of the applicable jurisdiction.

 

Unless we indicate otherwise in the applicable prospectus supplement, we intend to use the net proceeds from any sales by us of the securities offered under this prospectus and the accompanying prospectus supplement to provide additional funds for general corporate purposes. We may set forth additional information on the use of net proceeds from the sale of securities we or selling security holders offer under this prospectus in the prospectus supplement relating to a specific offering.

 

The following table sets out Ternium’s ratios of earnings to fixed charges for each of the five years ended December 31, 2009, 2008, 2007, 2006 and 2005 and for the nine month period ended September 30, 2010, calculated in accordance with International Financial Reporting Standards and IFRIC interpretations as issued by the International Accounting Standards Board and adopted by the European Union, or IFRS. IFRS differ in certain significant respects from generally accepted accounting principles in the United States, commonly referred to as U.S. GAAP.

 

 

For purposes of computing the ratios of earnings to fixed charges, earnings have been calculated by adding income before equity in earnings of associated companies and income tax, fixed charges, amortization of capitalized interest and distributed income of equity investees and subtracting interest capitalized, and preference security dividend requirements of consolidated subsidiaries. Fixed charges consist of adding interest expense, amortized premiums related to indebtedness and an appropriate portion of rentals representative of the interest factor within rental expense.

 

The Company’s ADSs are listed on the NYSE under the symbol “TX”. Trading on the NYSE began on February 1, 2006. As of December 6, 2010 a total of 2,004,743,442 shares were registered in the Company’s shareholder register.

 

As of January 28, 2011, a total of 27,364,319 ADSs were oustanding under Ternium’s ADS program. On January 28, 2011, the closing sales price for the ADSs on the NYSE was USD 38.30 per ADS.

 

New York Stock Exchange

 

Each ADS represents ten shares of the Company’s stock. The Bank of New York Mellon acts as the Company’s depositary for issuing ADRs evidencing the ADSs. The following tables sets forth, for the periods indicated, the high and low daily quoted closing prices for the Company’s shares, in the form of ADSs, traded on the NYSE.

 

 

 

 

 

 

Source: Bloomberg.

 

The following table sets forth Ternium’s consolidated capitalization as of September 30, 2010. This table was prepared in accordance with IFRS. You should read this table in conjunction with the financial statements and other financial information included and incorporated by reference in this prospectus that were prepared in accordance with IFRS.

 

 

 

 

We, or the selling security holders, as the case may be, may from time to time offer under this prospectus, separately or together:

 

 

In this prospectus and in any accompanying prospectus supplement, when we refer to the “holders” of securities as being entitled to specified rights or payments, we mean only the actual legal holders of the securities. While you will be the holder if you hold a security registered in your name, more often than not the registered holder (also referred to as the “direct” holder) will actually be either a broker, bank, other financial institution or, in the case of a global security, a depositary. Our obligations, as well as the obligations of the trustee, any warrant agent, any transfer agent, any registrar, any depositary and any third parties employed by us or the other entities listed above, run only to persons who are registered as holders of our securities, except as may be specifically provided for in a warrant agreement, warrant certificate, deposit agreement or other contract governing the securities. For example, once we make payment to the registered holder, we have no further responsibility for the payment even if that registered holder is legally required to pass the payment along to you as a street name customer but does not do so.

 

If we choose or the selling security holder chooses to issue, offer or sell ordinary shares represented by ADSs, the underlying ordinary shares represented by ADSs will be directly held by a custodian or depositary. Your rights and obligations will be determined by reference to the terms of the relevant deposit agreement. A copy of the deposit agreement, as amended from time to time, with respect to our ordinary shares is on file with the SEC and incorporated by reference in this prospectus. You may obtain a copy of the deposit agreement from the SEC’s Public Reference Room. See “Available Information.”

 

Street Name and Other Indirect Holders

 

Holding securities in accounts at banks or brokers is called holding in “street name.” If you hold our securities in street name, we will recognize only the bank or broker, or the financial institution that the bank or broker uses to hold the securities, as a holder. These intermediary banks, brokers, other financial institutions and depositaries pass along principal, interest, dividends and other payments, if any, on the securities, either because they agree to do so in their customer agreements or because they are legally required to do so. This means that if you are an indirect holder, you will need to coordinate with the institution through which you hold your interest in a security in order to determine how the provisions involving holders described in this prospectus and any prospectus supplement will actually apply to you. For example, if a debt security in which you hold a beneficial interest in street name can be repaid at the option of the holder, you cannot redeem it yourself by following the procedures described in the prospectus supplement relating to that security. Instead, you would need to cause the institution through which you hold your interest to take those actions on your behalf. Your institution may have procedures and deadlines different from or additional to those described in the applicable prospectus supplement.

 

If you hold our securities in street name or through other indirect means, you should check with the institution through which you hold your interest in a security to find out:

 

 

 

Global Securities

 

A global security is a special type of indirectly held security. If we choose to issue our securities, in whole or in part, in the form of global securities, the ultimate beneficial owners can only be indirect holders. We do this by requiring that the global security be registered in the name of one or more financial institutions or clearing systems, or their nominees, which we select and by requiring that the securities included in the global security not be transferred to the name of any other direct holder unless the special circumstances described under the heading “— Special Situations When a Global Security Will Be Terminated” occur. A financial institution or clearing system that we select for any security for this purpose is called the “depositary.” A security will usually have only one depositary which will act as the sole direct holder of the global security but it may have more. Any person wishing to own a security issued in global form must do so indirectly through an account with a broker, bank or other financial institution that in turn has an account with the depositary. As a result, an investor whose security is represented by a global security will not be a holder of the security, but only an indirect owner of the interest in the global security. The prospectus supplement will indicate whether the securities will be issued only as global securities.

 

Each series of securities will have one or more of the following as the depositaries:

 

 

The depositaries named above may also be participants in one another’s systems. Thus, for example, if DTC is the depositary for a global security, investors may hold beneficial interests in that security through Euroclear or Clearstream, as DTC participants. The prospectus supplement will indicate whether the securities will be issued only as global securities and will name the depositary or depositaries for the securities.

 

A global security may represent one or any other number of individual securities. Generally, all securities represented by the same global security will have the same terms. We may, however, issue a global security that represents multiple securities of the same kind, such as debt securities, that have different terms and are issued at different times. We call this kind of global security a master global security. Your prospectus supplement will indicate whether your securities are represented by a master global security.

 

If the prospectus supplement for a particular security indicates that the security will be issued in global form only, then the security will be represented by a global security at all times unless and until the global security is terminated. We describe the situations in which this can occur below under “— Special Situations When a Global Security Will Be Terminated”. If termination occurs, we may issue the securities through another book-entry clearing system or decide that the securities may no longer be held through any book-entry clearing system.

 

Special Considerations for Global Securities

 

As an indirect owner, an investor’s rights relating to a global security will be governed by the account rules of the depositary and those of the investor’s financial institution or other intermediary through which it holds its interest (e.g., Euroclear or Clearstream, if DTC is the depositary), as well as general laws relating to securities transfers. We do not recognize this type of investor or any intermediary as a holder of securities and instead deal only with the depositary that holds the global security.

If securities are issued only in the form of a global security, an investor should be aware of the following:

 

 

Special Situations When a Global Security Will Be Terminated

 

If the prospectus supplement for a particular security indicates that the security will be issued in global form only, then the security will be represented by a global security at all times unless and until the global security is terminated. In a few special situations described below, a global security will be terminated and interests in it will be exchanged for certificates in non-global form representing the securities it represented. After that exchange, the choice of whether to hold the securities directly or in street name will be up to the investor. Investors must consult their own banks or brokers to find out how to have their interests in a global security transferred on termination to their own names, so that they will be direct holders.

 

Unless we specify otherwise in the prospectus supplement, the special situations for termination of a global security are as follows:

 

 

The prospectus supplement may also list additional circumstances in which a global security may be terminated that would apply to the particular securities covered by the prospectus supplement. If a global security is terminated, only the depositary, and not us or the trustee for any debt securities, is responsible for deciding the

names of the institutions in whose names the securities represented by the global security will be registered and, therefore, who will be the holders of those securities.

 

Considerations Relating to Euroclear and Clearstream

 

Euroclear and Clearstream are securities clearance systems in Europe. Both systems clear and settle securities transactions between their participants through electronic, book-entry delivery of securities against payment.

 

Euroclear and Clearstream may be depositaries for a global security. In addition, if DTC is the depositary for a global security, Euroclear and Clearstream may hold interests in the global security as participants in DTC. As long as any global security is held by Euroclear or Clearstream, as depositary, you may hold an interest in the global security only through an organization that participates, directly or indirectly, in Euroclear or Clearstream. If Euroclear or Clearstream is the depositary for a global security and there is no depositary in the United States, you will not be able to hold interests in that global security through any securities clearance system in the United States.

 

Payments, deliveries, transfers, exchanges, notices and other matters relating to the securities made through Euroclear or Clearstream must comply with the rules and procedures of those systems. Those systems could change their rules and procedures at any time. We do not have control over those systems or their participants and we take no responsibility for their activities. Transactions between participants in Euroclear or Clearstream, on one hand, and participants in DTC, on the other hand, when DTC is the depositary, would also be subject to DTC’s rules and procedures.

 

Special Timing Considerations for Transactions in Euroclear and Clearstream

 

Investors will be able to make and receive through Euroclear and Clearstream payments, deliveries, transfers, exchanges, notices and other transactions involving any securities held through those systems only on days when those systems are open for business. Those systems may not be open for business on days when banks, brokers and other institutions are open for business in the United States.

 

In addition, because of time-zone differences, U.S. investors who hold their interests in the securities through these systems and wish to transfer their interests, or to receive or make a payment or delivery or exercise any other right with respect to their interests, on a particular day may find that the transaction will not be effected until the next business day in Luxembourg City or Brussels, as applicable. Thus, investors who wish to exercise rights that expire on a particular day may need to act before the expiration date. In addition, investors who hold their interests through both DTC and Euroclear or Clearstream may need to make special arrangements to finance any purchases or sales of their interests between the U.S. and European clearing systems, and those transactions may settle later than would be the case for transactions within one clearing system.

 

 

This section describes the general terms and provisions of the debt securities that we may issue (separately or upon exercise of a debt warrant) in the form of one or more series of debt securities. You should read the more detailed provisions of the indenture, including the defined terms, for provisions that may be important to you. You should also read the particular terms of a series of debt securities, which will be described in more detail in the applicable prospectus supplement. The following summary is subject to and is qualified in its entirety by reference to all the provisions of the indenture and its associated documents, including the definitions of certain terms, and, with respect to any particular debt security, to the description of the terms of such debt securities that will be included in the applicable prospectus supplement.

 

General

 

The debt securities will be issued under an indenture, to be entered into between us and a trustee to be named in the applicable prospectus supplement, the form of which is filed as an exhibit to the registration statement of which this prospectus is a part. The indenture will provide that debt securities may be issued from time to time in one or more series, without limitation as to aggregate principal amount. We may specify a maximum aggregate principal amount for the debt securities of any particular series. Specific issuances of debt securities may also be governed by a supplemental indenture, an officer’s certificate or a document evidencing the authorization of any corporate body required by applicable law. The particular terms of each series, or of debt securities forming part of a series, will be described in the prospectus supplement relating to that series. Those terms may vary from the terms described here. This section summarizes material terms of the debt securities that are common to all series, unless otherwise indicated in this section or in the prospectus supplement relating to a particular series.

 

We may issue debt securities at par, at a premium or as original issue discount securities, which are debt securities that are offered and sold at a substantial discount to their stated principal amount. We may also issue debt securities as indexed securities or securities denominated in currencies other than the U.S. dollar, currency units or composite currencies, as described in more detail in the prospectus supplement relating to any such debt securities. We will describe the U.S. federal income tax consequences and any other special considerations applicable to original issue discount, indexed or foreign currency debt securities in the applicable prospectus supplement.

 

The prospectus supplement relating to a series of debt securities will describe the following terms of the series:

 

 

 

In addition, the prospectus supplement will state whether we will list the debt securities of the series on any stock exchange and, if so, which one.

 

Debt securities may bear interest at fixed or floating rates. We may issue our debt securities at an original issue discount, bearing no interest or bearing interest at a rate that, at the time of issuance, is below market rate, to be sold at a discount below their principal amount. Certain special U.S. federal income tax considerations, if any, applicable to debt securities sold at an original issue discount may be described in the applicable prospectus supplement. Moreover, certain special U.S. federal income tax or other considerations, if any, applicable to any debt securities which are denominated in a currency or currency unit other than the U.S. dollar may be described in the applicable prospectus supplement.

 

Form, Exchange and Transfer

 

The debt securities will be issued, unless otherwise indicated in the applicable prospectus supplement, in denominations that are even multiples of $1,000 and in global registered form. You may have your debt securities broken into more debt securities of smaller denominations or combined into fewer debt securities of larger denominations, as long as the total principal amount is not changed. This is called an exchange. You may exchange or transfer your registered debt securities at the office of the trustee. The trustee will maintain an office in New York,

New York. The trustee acts as our agent for registering debt securities in the names of holders and transferring registered debt securities. We may change this appointment to another entity or perform the service ourselves. The entity performing the role of maintaining the list of registered holders is called the “security registrar.” It will also register transfers of the registered debt securities.

 

You will not be required to pay a service charge to transfer or exchange debt securities, but you may be required to pay any tax or other governmental charge associated with the exchange or transfer. The transfer or exchange of a registered debt security will only be made if the security registrar is satisfied with your proof of ownership.

 

If we designate additional transfer agents, they will be named in the prospectus supplement. We may cancel the designation of any particular transfer agent. We may also approve a change in the office through which any transfer agent acts.

 

If the debt securities are redeemable and we redeem less than all of the debt securities of a particular series, we may block the transfer or exchange of debt securities in order to freeze the list of holders to prepare the mailing during the period beginning 15 days before the day we mail the notice of redemption and ending on the day of that mailing. We may also refuse to register transfers or exchanges of debt securities selected for redemption. However, we will continue to permit transfers and exchanges of the unredeemed portion of any debt security being partially redeemed.

 

Payment and Paying Agents

 

If your debt securities are in registered form, we will pay interest to you if you are a direct holder listed in the trustee’s records at the close of business on a particular day in advance of each due date for interest, even if you no longer own the security on the interest due date. That particular day, usually about two weeks in advance of the interest due date, is called the “regular record date” and will be stated in the prospectus supplement.

 

We will pay interest, principal, additional amounts and any other money due on the registered debt securities at the corporate trust office of the applicable trustee in New York City. You must make arrangements to have your payments picked up at or wired from that office. We may also choose to pay interest by mailing checks. Interest on global securities will be paid to the holder thereof by wire transfer of same-day funds.

 

Holders buying and selling debt securities must work out between themselves how to compensate for the fact that we will pay all the interest for an interest period to, in the case of registered debt securities, the one who is the registered holder on the regular record date. The most common manner is to adjust the sales price of the debt securities to pro-rate interest fairly between the buyer and seller. This pro-rated interest amount is called “accrued interest.”

 

Street name and other indirect holders should consult their banks or brokers for information on how they will receive payments.

 

We may also arrange for additional payment offices, and may cancel or change these offices, including our use of the trustee’s corporate trust office. These offices are called “paying agents.” We may also choose to act as our own paying agent. We must notify you of changes in the paying agents for the debt securities of any series that you hold.

 

Ranking

 

Unless otherwise provided in a prospectus supplement relating to any debt securities, our debt securities will not be secured by any of our assets or properties. As a result, the securities will effectively be subordinated to our secured indebtedness, if any, and indebtedness preferred by law.

 

The applicable prospectus supplement will indicate whether the debt securities are subordinated to any of our other debt obligations. If they are not subordinated, in the event of bankruptcy or liquidation proceeding against us, they will rank equally with all our other unsecured and unsubordinated indebtedness, except for indebtedness having priority by operation of law.

Restrictive Covenants

 

Other than as described below under “— Consolidation, Merger and Sale of Assets,” the indenture will not contain any provisions that would limit our ability to make payments, dispose of assets, enter into sale and leaseback transactions, issue and sell capital stock, enter into transactions with affiliates, create or incur liens on our property, engage in businesses other than our present business or incur indebtedness or that would afford holders of debt securities protection in the event of a sudden and significant decline in our credit quality or a takeover, recapitalization or highly leveraged or other transaction involving us. Accordingly, we could in the future enter into transactions that could increase the amount of indebtedness outstanding at that time or otherwise affect our capital structure or credit rating. Restrictive covenants, if any, with respect to any of our debt securities may be contained in the applicable supplemental indenture and described in the applicable prospectus supplement with respect to those securities. You should refer to the prospectus supplement relating to a particular series of debt securities for information about any deletions from, modifications of or additions to, the Events of Default or covenants of ours contained in the indenture, including any addition of a covenant or other provision providing event risk or similar protection.

 

Consolidation, Merger and Sale of Assets

 

Under the indenture, except as described below, we will be generally permitted to consolidate or merge with another entity. We will also be permitted to sell or lease all or substantially all of our assets to another entity or to buy or lease all or substantially all of the assets of another entity. Generally, no vote by holders of debt securities approving any of these actions will be required, unless as part of the transaction we make changes to the indenture requiring your approval, as described later under “— Modification and Waiver.” We may take these actions as part of a transaction involving non-related third parties or as part of an internal corporate reorganization. We may take these actions even if they result in:

 

 

We will have no obligation under the indenture to seek to avoid these results, or any other legal or financial effects that are disadvantageous to you, in connection with a merger, consolidation or sale or lease of assets that will be permitted under the indenture.

 

We may merge into or consolidate with or convey, transfer or lease all or substantially all of our assets to another entity, provided that we may not take any of these actions unless all the following conditions are met:

 

 

Notwithstanding the restrictions noted above, we may transfer or lease all or substantially all of our properties and assets to any wholly owned subsidiary, provided that we may not take such actions unless such wholly owned subsidiary expressly assumes the obligations under the debt securities and the indenture pursuant to a full and unconditional guarantee.

 

It is possible that the U.S. Internal Revenue Service or another relevant tax authority may deem a merger or other similar transaction to cause for U.S. federal income tax purposes an exchange of debt securities for new securities by the holders of the debt securities. This could result in the recognition of taxable gain or loss and possible other adverse tax consequences.

Redemption and Repayment

 

Unless otherwise indicated in the applicable prospectus supplement, your debt security will not be entitled to the benefit of any sinking fund; that is, we will not deposit money on a regular basis into any separate custodial account to repay your debt securities. In addition, other than as set forth in “— Optional Tax Redemption” below, we will not be entitled to redeem your debt security before its stated maturity unless the applicable prospectus supplement specifies a redemption commencement date. You will not be entitled to require us to buy your debt security from you, before its stated maturity, unless the applicable prospectus supplement specifies one or more repayment dates.

 

If the applicable prospectus supplement specifies a redemption commencement date or a repayment date, it will also specify one or more redemption prices or repayment prices, which may be expressed as a percentage of the principal amount of your debt security or by reference to one or more formulas used to determine the applicable redemption price. It may also specify one or more redemption periods during which the redemption price or prices relating to the redemption of debt securities during those periods will apply.

 

If the applicable prospectus supplement specifies a redemption commencement date, we may redeem your debt security at our option at any time on or after that date. If we redeem your debt security, we will do so at the specified redemption price, together with interest accrued to the redemption date. If different prices are specified for different redemption periods, the price we pay will be the price that applies to the redemption period during which your debt security is redeemed. If less than all of the debt securities are redeemed, the trustee will choose the debt securities to be redeemed by lot, or in the trustee’s discretion, pro-rata.

 

If the applicable prospectus supplement specifies a repayment date, your debt security will be repayable by us at our option on the specified repayment date at the specified repayment price, together with interest accrued and any additional amounts to the repayment date.

 

In the event that we exercise an option to redeem any debt security, we will give to the trustee and the holder written notice of the principal amount of the debt security to be redeemed, not less than 30 days nor more than 60 days before the applicable redemption date. We will give the notice in the manner described under the heading “— Notices.”

 

If a debt security represented by a global security is subject to repayment at the holder’s option, the depositary or its nominee, as the holder, will be the only person that can exercise the right to repayment. Any indirect holders who own beneficial interests in the global security and wish to exercise a repayment right must give proper and timely instructions to their banks or brokers through which they hold their interests, requesting that they notify the depositary to exercise the repayment right on their behalf. Different firms have different deadlines for accepting instructions from their customers, and you should take care to act promptly enough to ensure that your request is given effect by the depositary before the applicable deadline for exercise.

 

Street name and other indirect holders should contact their banks or brokers for information about how to exercise a repayment right in a timely manner.

 

In the event that the option of the holder to elect repayment as described above is deemed to be a “tender offer” within the meaning of Rule 14e-1 under the Exchange Act, we will comply with Rule 14e-1 as then in effect to the extent it is applicable to us and the transaction.

 

Subject to any restrictions that will be described in the prospectus supplement, we or our affiliates may purchase debt securities from investors who are willing to sell from time to time, either in the open market at prevailing prices or in private transactions at negotiated prices. Debt securities that we or they purchase may, in our discretion, be held, resold or canceled.

 

Optional Tax Redemption

 

Unless otherwise indicated in a prospectus supplement, we shall have the option (but not the obligation) to redeem, in whole but not in part, the debt securities where, as a result of a change in, execution of or amendment to any laws or treaties or the official application or interpretation of any laws or treaties, we would be required to pay additional amounts as described later under “Payment of Additional Amounts.” This applies only in the case of

changes, executions or amendments that occur on or after the date specified in the prospectus supplement for the applicable series of debt securities.

 

If the debt securities are redeemed, the redemption price for debt securities (other than original issue discount debt securities) will be equal to the principal amount of the debt securities being redeemed plus accrued interest and any additional amounts due up to, but not including, the date fixed for redemption. The redemption price for original issue discount debt securities will be specified in the prospectus supplement for such securities. Furthermore, we must give you between 30 and 60 days’ notice before redeeming the debt securities.

 

Conversion or Exchange Rights

 

If debt securities of any series are convertible or exchangeable, the applicable prospectus supplement will specify:

 

 

Payment of Additional Amounts

 

Unless otherwise required by law, we will not deduct or withhold from payments made with respect to the debt securities on account of any current or future taxes, duties, levies, imposts, assessments or governmental charges of whatever nature, which we refer to as “Taxes,” imposed or levied by or on behalf of Luxembourg or, if succeeded by another entity, the jurisdiction in which such successor entity is organized, or any political subdivisions or taxing authority thereof or therein having power to tax, which we refer to as a “Taxing Authority.” In the event that we are required to withhold or deduct any amount for or on account of such Taxes from any payment made under or with respect to any debt securities, we will except in the circumstances set forth below pay such additional amounts so that the net amount received by each holder of debt securities, including the additional amounts, will equal the amount that such holder would have received if such Taxes had not been required to be withheld or deducted. We refer to the amounts that we are required to pay to preserve the net amount receivable by the holders of debt securities as “Additional Amounts.”

 

Our obligation to pay Additional Amounts is, however, subject to several important exceptions. Additional Amounts will not be payable with respect to a payment made to a holder of debt securities to the extent:

 

 

 

(1) the making of such declaration or claim or the provision of such certificate is required or imposed by statute, treaty, regulation, ruling or administrative practice of the relevant Taxing Authority as a precondition to an exemption from, or reduction in, the relevant Taxes; and

 

(2) at least 60 days prior to the first payment date with respect to which we shall apply this condition, we shall have notified all holders of the debt securities in writing that they shall be required to provide such declaration or claim;

 

 

Such Additional Amounts also will not be payable where, had the beneficial owner of the debt securities been the holder of such debt securities, it would not have been entitled to payment of Additional Amounts by reason of the conditions set forth above. The prospectus supplement relating to the debt securities may describe additional circumstances in which we would not be required to pay additional amounts.

 

We will also:

 

 

At least 30 days prior to each date on which any payment under or with respect to the debt securities is due and payable, if we will be obligated to pay Additional Amounts with respect to such payment, we will deliver to the trustee an officer’s certificate stating the fact that such Additional Amounts will be payable, the amounts so payable and such other information as is necessary to enable the trustee to pay such Additional Amounts to holders of the debt securities on the payment date.

 

In addition, we will pay any stamp, issue, registration, documentary or other similar taxes and duties, including interest, penalties and Additional Amounts with respect thereto, payable in Luxembourg or the United States or any political subdivision or taxing authority of or in the foregoing in respect of the creation, issue, offering,

enforcement, redemption or retirement of the debt securities if and to the extent any such creation, issue, offering, enforcement, redemption or retirement was required pursuant to applicable law or ordered by a court or Taxing Authority.

 

The foregoing provisions shall survive any termination or the discharge of the indenture and shall apply to any jurisdiction in which any successor to us is organized or is engaged in business for tax purposes or any political subdivisions or taxing authority or agency thereof or therein.

 

Whenever in the indenture, the debt securities, in this “Description of Debt Securities” or in the applicable prospectus supplement there is mentioned, in any context, the payment of principal, premium, if any, redemption price, interest or any other amount payable under or with respect to any note, such mention includes the payment of Additional Amounts to the extent payable in the particular context.

 

In the event that Additional Amounts actually paid with respect to the debt securities pursuant to the preceding paragraphs are based on rates of deduction or withholding of Taxes in excess of the appropriate rate applicable to the holder of such debt securities, and as a result thereof such holder is entitled to make a claim for a refund or credit of such excess from the Taxing Authority imposing such Taxes, then such holder shall, by accepting such debt securities, be deemed to have assigned and transferred all right, title and interest to any such claim for a refund or credit of such excess to us. However, by making such assignment, the holder makes no representation or warranty that we will be entitled to receive such claim for a refund or credit and incurs no other obligation with respect thereto.

 

Defeasance and Covenant Defeasance

 

We may, to the extent indicated in the applicable prospectus supplement, elect, at our option at any time, to have the provisions of the indenture relating to defeasance and discharge of indebtedness or to defeasance of certain restrictive covenants in the indenture, applied to the debt securities of any series, or to any specified part of a series.

 

Defeasance and Discharge.  Upon the exercise of our option, if any, to have applied the provisions of the indenture relating to defeasance and discharge, we will be discharged from all our payment and other obligations, and the provisions relating to subordination, if any, will cease to be effective, with respect to such debt securities, subject to certain exceptions, upon the deposit in trust for the benefit of the holders of such debt securities of money or U.S. Government Obligations, as such term is defined in the indenture, or both, which, through the payment of principal and interest in respect thereof in accordance with their terms, will provide money in an amount sufficient to pay the principal of and any premium and interest on such debt securities on their respective stated maturities. Such defeasance may occur only if we have complied with certain conditions that will be set forth in the relevant indenture.

 

Defeasance of Certain Covenants.  Upon the exercise of our option, if any, to have applied the provisions of the indenture relating to defeasance of certain restrictive covenants in the indenture, we may omit to comply with certain restrictive covenants, including any that may be described in the applicable prospectus supplement, and the occurrence of certain events of default as specified in the applicable prospectus supplement, will be deemed not to be or result in an event of default and the provisions relating to subordination, if any, will cease to be effective, in each case with respect to such debt securities, subject to certain exceptions, upon the deposit in trust for the benefit of the holders of such debt securities of money or U.S. Government Obligations, as such term is defined in the indenture, or both, which, through the payment of principal and interest in respect thereof in accordance with their terms, will provide money in an amount sufficient to pay the principal of and any premium and interest on such debt securities on the respective stated maturities. Such defeasance or discharge may occur only if we have complied with certain conditions that will be set forth in the relevant indenture.

 

Events of Default

 

Each of the following will constitute an event of default under the indenture with respect to the debt securities of any series:

 

 

 

The applicable prospectus supplement will describe any additional events of default.

 

If an event of default (other than an event of default related to certain events in bankruptcy, insolvency or reorganization) with respect to the debt securities of any series at the time outstanding shall occur and be continuing, either the trustee or the holders of not less than 37.5% in principal amount of the outstanding debt securities of such series by notice as provided in the indenture may declare the principal amount of the debt securities of such series (or, in the case of any debt security that is an original issue discount security or the principal amount of which is not then determinable, such portion of the principal amount of such security, or such other amount in lieu of such principal amount, as may be specified in the terms of such debt security) to be due and payable immediately. If an event of default related to certain events in bankruptcy, insolvency or reorganization with respect to the debt securities of any series at the time outstanding shall occur, the principal amount of all the debt securities of such series (or, in the case of any such original issue discount security or other debt security, such specified amount) will automatically, and without any action by the trustee or any holder, become immediately due and payable. After any such acceleration, but before a judgment or decree based on acceleration, the holders of a majority in aggregate principal amount of the outstanding debt securities of such series may, under certain circumstances, rescind and annul such acceleration if all events of default, other than the non-payment of accelerated principal (or other specified amount), have been cured or waived as provided in the indenture. For information as to waiver of defaults, see “— Modification and Waiver.”

 

Subject to the provisions of the indenture relating to the duties of the trustee in case an event of default shall occur and be continuing, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request or direction of any of the holders, unless such holders shall have offered to the trustee reasonable indemnity. Subject to such provisions for the indemnification of the trustee, the holders of a majority in aggregate principal amount of the outstanding debt securities of any series will have the right to direct the time, method and place of conducting any proceeding for any remedy available to the trustee or exercising any trust or power conferred on the trustee with respect to the debt securities of that series.

 

No holder of a debt security of any series will have any right to institute any proceeding with respect to the indenture, or for the appointment of a receiver or a trustee, or for any other remedy thereunder, unless (i) such holder has previously given to the trustee written notice of a continuing event of default with respect to the debt securities of that series, (ii) the holders of at least 37.5% in aggregate principal amount of the outstanding debt securities of such series have made written request, and such holder or holders have offered reasonable indemnity, to the trustee to institute such proceeding as trustee and (iii) the trustee has failed to institute such proceeding, and has not received from the holders of a majority in aggregate principal amount of the outstanding debt securities of such series a direction inconsistent with such request, within 60 days after such notice, request and offer. However, such limitations do not apply to a suit instituted by a holder of a debt security for the enforcement of payment of the principal of or any premium or interest on such debt security on or after the applicable due date specified in such debt security.

We will be required to furnish to the trustee annually a statement by certain of our officers as to whether or not we, to their knowledge, are in default in the performance or observance of any of the terms, provisions and conditions of the indenture and, if so, specifying all such known defaults. The indenture provides that if a default occurs with respect to debt securities of any series, the trustee will give the holders of the relevant series notice of the default when, as and to the extent provided by the Trust Indenture Act of 1939. However, in the case of any default under any covenant with respect to the series, no notice of default to holders will be given until at least 30 days after the occurrence of the default.

 

An event of default under any of our other outstanding or future debt instruments or guarantees shall not constitute an event of default under the terms of the indenture and the debt securities described in this prospectus.

 

Modification and Waiver

 

There are three types of changes we can make to the indenture and the debt securities.

 

Changes Requiring Your Approval.  First, there are changes that cannot be made to your debt securities without your specific approval. These are the following types of changes:

 

 

Changes Requiring a Majority Vote.  The second type of change to the indenture and the debt securities is the kind that requires a vote of approval by the holders of debt securities that together represent a majority of the outstanding aggregate principal amount of the particular series affected. Most changes fall into this category, except for clarifying changes, amendments, supplements and other changes that would not adversely affect holders of the debt securities in any material respect. For example, this vote would be required for us to obtain a waiver of all or part of any covenants described in an applicable prospectus supplement or a waiver of a past default. However, we cannot obtain a waiver of a payment default or any other aspect of the indenture or the debt securities listed in the first category described previously beginning above under “Modification and Waiver — Changes Requiring Your Approval” unless we obtain your individual consent to the waiver.

 

Changes Not Requiring Approval.  The third type of change does not require any vote by holders of debt securities. This type is limited to clarifications of ambiguities, omissions, defects and inconsistencies, amendments, supplements and other changes that would not adversely affect holders of the debt securities in any material respect, such as adding covenants, additional events of default or successor trustees.

 

Further Details Concerning Voting.  When taking a vote, we will use the following rules to decide how much principal amount to attribute to a security:

 

 

 

Debt securities will not be considered outstanding, and therefore will not be eligible to vote, if we have deposited or set aside in trust for you money for their payment or redemption. Debt securities will also not be eligible to vote if they have been fully defeased as described under “Defeasance and Covenant Defeasance — Defeasance and Discharge.”

 

We will generally be entitled to set any day as a record date for the purpose of determining the holders of outstanding debt securities that are entitled to vote or take other action under the indenture. In limited circumstances, the trustee will be entitled to set a record date for action by holders. If we or the trustee set a record date for a vote or other action to be taken by holders of a particular series, that vote or action may be taken only by persons who are holders of outstanding debt securities of that series on the record date and must be taken within 180 days following the record date or another period that we or, if it sets the record date, the trustee may specify. We may shorten or lengthen (but not beyond 180 days) this period from time to time.

 

Street name and other indirect holders should consult their banks or brokers for information on how approval may be granted or denied if we seek to change the indenture or the debt securities or request a waiver.

 

Notices

 

Notices to be given to direct holders of a global debt security will be given only to the depositary, in accordance with its applicable policies as in effect from time to time. Notices to be given to direct holders of debt securities not in global form will be sent by mail to the respective addresses of the holders as they appear in the trustee’s records, and will be deemed given when mailed. Neither the failure to give any notice to a particular holder, nor any defect in a notice given to a particular holder, will affect the sufficiency of any notice given to another holder.

 

Regardless of who acts as paying agent, all money that we pay to a paying agent that remains unclaimed at the end of two years after the amount is due to direct holders will be repaid to us. After that two-year period, direct holders may look only to us for payment and not to the trustee, any other paying agent or anyone else.

 

Further Issues

 

We may from time to time, without notice to or the consent of the holders of debt securities previously offered under this prospectus, create and issue additional debt securities having the same terms as and ranking equally and ratably with the debt securities previously offered under this prospectus in all respects (or in all respects except for the payment of interest accruing prior to the issue date of such additional debt securities or except for the first payment of interest following the issue date of such additional debt securities), so that such additional debt securities shall be consolidated and form a single series with, and shall have the same terms as to status, redemption or otherwise as, those debt securities.

 

Governing Law

 

The indenture and the debt securities will be governed by and construed in accordance with the law of the State of New York. We will consent to the non-exclusive jurisdiction of any U.S. federal court sitting in the borough of Manhattan, City of New York, New York, United States and any appellate court from any thereof.

 

As permitted by applicable law, the provisions of articles 86 to 94-8 of the Luxembourg Companies Law will not apply.

Consent to Service of Process

 

The indenture will provide for the appointment of an authorized agent for service of process in any legal action or proceeding arising out of or relating to the indenture or the debt securities offered under the indenture brought in any federal or state court in the Borough of Manhattan, City of New York, New York, United States and will identify such agent for service of process. In addition, we will irrevocably submit to the non-exclusive jurisdiction of such courts in any such legal action or proceeding.

 

Regarding the Trustee

 

We may appoint a trustee with whom we and/or some of our affiliates maintain banking relations in the ordinary course of business. If an event of default occurs, or an event occurs that would be an event of default if the requirements for giving us default notice or our default having to exist for a specified period of time were disregarded, the trustee may be considered to have a conflicting interest with respect to the debt securities or the indenture for purposes of the Trust Indenture Act of 1939. In that case, the trustee may be required to resign as trustee under the applicable indenture and we would be required to appoint a successor trustee.

 

We may issue warrants to purchase our debt securities. Warrants may be issued independently or together with any securities and may be attached to or separate from those securities. Each series of warrants will be issued under a separate warrant agreement to be entered into by us and a bank or trust company, as warrant agent, all as will be set forth in the applicable prospectus supplement.

 

The following briefly summarizes the material terms that will generally be included in a debt warrant agreement. However, we may include different terms in the debt warrant agreement for any particular series of debt warrants and such other terms and all pricing and related terms will be disclosed in the applicable prospectus supplement. You should read the particular terms of any debt warrants that are offered by us and the related debt warrant agreement which will be described in more detail in the applicable prospectus supplement. The applicable prospectus supplement will also state whether any of the generalized provisions summarized below do not apply to the debt warrants being offered.

 

General

 

We may issue warrants for the purchase of our debt securities. As explained below, each debt warrant will entitle its holder to purchase debt securities at an exercise price set forth in, or to be determined as set forth in, the applicable prospectus supplement. Debt warrants may be issued separately or together with debt securities.

 

The debt warrants are to be issued under debt warrant agreements to be entered into by us and one or more banks or trust companies, as debt warrant agent, all as will be set forth in the applicable prospectus supplement. At or around the time of an offering of debt warrants, a form of debt warrant agreement, including a form of debt warrant certificate representing the debt warrants, reflecting the alternative provisions that may be included in the debt warrant agreements to be entered into with respect to particular offerings of debt warrants, will be filed as an exhibit to the registration statement of which this prospectus forms a part.

 

Terms of the Debt Warrants to Be Described In the Prospectus Supplement

 

The particular terms of each issue of debt warrants, the debt warrant agreement relating to such debt warrants and such debt warrant certificates representing debt warrants will be described in the applicable prospectus supplement. This description will include:

 

 

 

You may exchange your debt warrant certificates for new debt warrant certificates of different denominations but they must be exercisable for the same aggregate principal amount of debt securities. If your debt warrant certificates are in registered form, you may present them for registration of transfer at the corporate trust office of the debt warrant agent or any other office indicated in the applicable prospectus supplement. Except as otherwise indicated in a prospectus supplement, before the exercise of debt warrants, holders of debt warrants will not be entitled to payments of principal or any premium or interest on the debt securities that can be purchased upon such exercise, or to enforce any of the covenants in the indenture relating to the debt securities that may be purchased upon such exercise.

 

Exercise of Debt Warrants

 

Unless otherwise provided in the applicable prospectus supplement, each debt warrant will entitle the holder to purchase a principal amount of debt securities for cash at an exercise price in each case that will be set forth in, or to be determined as set forth in, the applicable prospectus supplement. Debt warrants may be exercised at any time up to the close of business on the expiration date specified in the applicable prospectus supplement. After the close of business on the expiration date or any later date to which we extend the expiration date, unexercised debt warrants will become void.

 

Debt warrants may be exercised as set forth in the prospectus supplement applicable to the particular debt warrants. Upon delivery of payment of the exercise price and the debt warrant certificate properly completed and duly executed at the corporate trust office of the debt warrant agent or any other office indicated in the applicable prospectus supplement, we will, as soon as practicable, forward the debt securities that can be purchased upon such exercise of the debt warrants to the person entitled to them. If fewer than all of the debt warrants represented by the debt warrant certificate are exercised, a new debt warrant certificate will be issued for the remaining unexercised debt warrants. Holders of debt warrants will be required to pay any tax or governmental charge that may be imposed in connection with transferring the underlying debt securities in connection with the exercise of the debt warrants.

 

Street name and other indirect holders of debt warrants should consult their bank or brokers for information on how to exercise their debt warrants.

 

The following description of our ordinary shares of common stock, together with the additional information we may include in any applicable prospectus supplement, is a summary of the material terms of the Company’s updated and consolidated articles of association and applicable Luxembourg law regarding our ordinary shares and the holders thereof. They may not contain all of the information that is important to you. The following description is qualified in its entirety by reference to the Company’s updated and consolidated articles of association, copies of which are filed with the SEC as an exhibit to our Annual Report, which is incorporated by reference herein, and applicable Luxembourg law.

 

General

 

The Company has an authorized share capital of a single class of 3.5 billion shares having a nominal value of USD1.00 per share. The Company’s authorized share capital is fixed by its articles of association, as amended from time to time, with the approval of shareholders at an extraordinary general shareholders’ meeting. The extraordinary general meeting of shareholders held on June 2, 2010 renewed the validity of the Company’s authorized share capital for a period of five years as of July 15, 2010, the date of publication of the deed recording the minutes of such meeting in Luxembourg’s official gazette. As of January 28, 2011, there were 2,004,743,442 shares issued. All issued shares are fully paid.

 

The Company’s articles of association authorized the board of directors or any delegate(s) duly appointed by the board of directors, to issue shares within the limits of its authorized share capital against contributions in cash, contributions in kind or by way of incorporation of available reserves, at such times and on such terms and conditions, including the issue price, as the board of directors or its delegates may at their discretion determine. The extraordinary general meeting of shareholders held on June 2, 2010 renewed this authorization for a period of five years as of July 15, 2010, the date of publication of the deed recording the minutes of such meeting in Luxembourg’s official gazette. Accordingly, shares may be issued up to the authorized share capital limit of USD3.5 billion by a decision of the board of directors or any delegate(s) duly appointed by it, and on the terms and conditions determined by the board of directors or its delegate(s). The terms and conditions of any particular issuance of shares will be set forth in the relevant prospectus supplement.

 

Additionally, the Company’s shareholders have authorized the board of directors to waive, suppress or limit any pre-emptive subscription rights of shareholders provided for by law to the extent it deems such waiver, suppression or limitation advisable for any issue or issues of shares within the authorized share capital. However, if and from the date the Company’s shares are listed on a regulated market (and only for as long as they are so listed), any issuance of shares for cash within the limits of the authorized share capital shall be subject to the pre-emptive subscription rights of the then existing shareholders (as set out in the articles of association), except in the following cases (in which cases no pre-emptive rights shall apply):

 

(a) any issuance of shares for, within, in conjunction with or related to, an initial public offering of Ternium’s shares on one or more regulated markets (in one or more instances);

 

(b) any issuance of shares against a contribution other than in cash;

 

(c) any issuance of shares upon conversion of convertible bonds or other instruments convertible into shares; provided, however, that the pre-emptive subscription rights of the then existing shareholders shall apply by provision of Ternium’s articles of association in connection with any issuance of convertible bonds or other instruments convertible into shares for cash; and

 

(d) any issuance of shares (including by way of free shares or at a discount), up to an amount of 1.5% of the issued share capital of the Company, to directors, officers, agents or employees of the Company, its direct or indirect subsidiaries, or its Affiliates (as such term is defined in the Company’s articles of association), including without limitation the direct issue of shares or upon the exercise of options, rights convertible into shares, or similar instruments convertible or exchangeable into shares issued for the purpose of, or in relation to, compensation or incentive of any such persons.

Dividends

 

Subject to applicable law, all shares (including shares underlying ADSs) are entitled to participate equally in dividends when, as and if declared by the shareholders at the ordinary general shareholders’ meeting, out of funds legally available for such purposes. Under Luxembourg law, claims for dividends will lapse five years after the date such dividends are declared. However, we may elect to pay a declared dividend after such period. The shareholders may, at an ordinary general shareholders’ meeting, which every shareholder has the right to attend in person or by proxy, declare a dividend under Article 21 of the Company’s articles of association.

 

Under Article 21 of the articles of association, the Company’s board of directors has the power to distribute interim dividends in accordance with the conditions that apply to commercial companies set forth in particular in Section 72-2 of the Luxembourg Companies Law.

 

Pursuant to Luxembourg law, at least 5% of our net profits per year must be allocated to the creation of a legal reserve until such reserve has reached an amount equal to 10% of our issued share capital. If the legal reserve later falls below the 10% threshold, at least 5% (or such lower amount required to reach the 10% threshold) of net profits again must be allocated toward the reserve. The Company’s legal reserve represented 10% of its share capital as of September 30, 2010. The legal reserve is not available for distribution.

 

Voting Rights; Shareholders’ Meetings; Election of Directors

 

Each share entitles the holder to one vote at the Company’s general shareholders’ meetings. Shareholder action by written consent is not permitted, but proxy voting is permitted. Notices of general shareholders’ meetings are governed by the provisions of Luxembourg law and the Company’s articles of association. Notices of such meetings must be published twice, at least at an eight-day interval, the second notice appearing at least eight days prior to the meeting, in the Luxembourg Official Gazette and in a leading newspaper having general circulation in Luxembourg. If an extraordinary general shareholders’ meeting is adjourned for lack of a quorum, notices must be published twice, in the Luxembourg Official Gazette and two Luxembourg newspapers, at a 15-day interval, the second notice appearing at least 15 days prior to the meeting. In case the Company’s shares are listed on a foreign regulated market, notices of general shareholders’ meetings shall also be published in accordance with the publicity requirements of such regulated market. No attendance quorum is required at ordinary general shareholders meetings and resolutions are adopted by a simple majority vote of the shares present or represented and voted at the meeting. An extraordinary general shareholders meeting must have a quorum of at least 50% of the issued share capital. If a quorum is not reached, such meeting may be reconvened at a later date with no quorum requirements by means of the appropriate notification procedures provided for by Luxembourg company law. In both cases, Luxembourg company law and the Company’s articles of association require that any resolution of an extraordinary general shareholders’ meeting be adopted by a two-thirds majority of the votes of the shares present or represented. If a proposed resolution consists of changing the Company’s nationality or of increasing the shareholders’ commitments, the unanimous consent of all shareholders is required. Directors are elected at ordinary general shareholders meetings. Cumulative voting is not permitted. The Company’s articles of association do not provide for staggered terms and directors are elected for a maximum of one year and may be reappointed or removed at any time, with or without cause, by resolution passed by a simple majority vote of the shares present or represented and voted. In the case of a vacancy occurring in the Board of Directors, the remaining directors shall have the right to temporarily fill such vacancy by the affirmative vote of a majority of the remaining directors. The term of a temporary director elected to fill a vacancy shall expire at the end of the term of office of the replaced director; provided however that the next Shareholder’s Meeting shall be called upon to proceed with the definitive election of any temporary member of the Board of Directors so elected.

 

The annual ordinary general shareholders meetings shall take place in Luxembourg on the first Wednesday of every June at 2:30 p.m., Luxembourg time. If that day is a legal or banking holiday in Luxembourg, the meeting shall be held on the following business day.

 

Any shareholder holding on the fifth calendar day preceding the applicable general shareholders’ meeting (the “Record Date”) shall be admitted to such general shareholders’ meeting. Those shareholders who have sold their shares between the Record Date and the date of the general shareholders’ meeting, may not attend or be represented at the meeting.

In the case of shares held through fungible securities accounts, each shareholder may exercise all rights attached to his shares and, in particular, may participate in and vote at shareholders’ meetings of the Company upon presentation of a certificate issued by the financial institution or professional depositary holding the shares, evidencing such deposit and certifying the number of shares recorded in the relevant account on the Record Date. Such certificate must be filed at least five days before the meeting with the Company at its registered address or at the address stated in the convening notice or, in case the Company’s shares are listed on a regulated market, with an agent of the Company located in the country of the listing and designated in the convening notice. In case any such holder wishes to vote by proxy, the holder shall have to present a completed proxy form together with the certificate previously referred, by the same date and time and at the same addresses.

 

The board of directors and the shareholders’ meeting may, if they deem so advisable, reduce these periods of time for all shareholders and admit all shareholders (or their proxies) who have filed the appropriate documents to the general shareholders’ meeting, irrespective of these time limits.

 

Access to Corporate Records

 

Luxembourg law and the Company’s articles of association do not generally provide for shareholder access to corporate records. Shareholders may inspect the annual accounts and auditors’ reports at the Company’s registered office during the fifteen-day period prior to the annual general shareholders’ meeting.

 

Appraisal Rights

 

In case the shares of the Company are listed on one or more regulated markets, and in the event the shareholders, in a general meeting, approve any of the following:

 

 

dissenting or absent shareholders have the right to have their shares repurchased by the Company at (i) the average market value of the shares over the 90 calendar days preceding the applicable general shareholders’ meeting or (ii) in the event that the Company’s shares are not traded on any regulated market, the amount that results from applying the proportion of the Company’s equity that the shares being sold represent over the Company’s net worth as determined in its last consolidated financial statements approved by the shareholders or in its last interim consolidated financial statements approved by the board of directors, whichever is more recent. Shareholders who voted in favor of the relevant resolution are not entitled to exercise this right.

 

Dissenting or absent shareholders must present their claim within one month following the date of the applicable general shareholders’ meeting and supply the Company with evidence of their shareholding at the time of such meeting. The Company must (to the extent permitted by applicable laws and regulations and in compliance therewith) repurchase its shares within six months following the date of the applicable general shareholders’ meeting.

If delisting from one or more, but not all, of the regulated markets where the Company’s shares are listed is approved in a shareholders’ meeting, only dissenting or absent shareholders with shares held through participants in the local clearing system for that market or those markets can exercise this appraisal right if:

 

 

In the event a shareholder exercises its appraisal rights, applicable Luxembourg law provisions shall apply.

 

Distribution of Assets on Winding-up

 

In the event of the Company’s liquidation, dissolution or winding-up, the net assets remaining after allowing for the payment of all debts, charges and expenses shall be paid out to holders of the Company’s shares in proportion to their respective holdings.

 

Transferability and Form

 

The Company’s articles of association do not contain any redemption or sinking fund provisions, nor do they impose restrictions on the transfer of shares. The shares are issuable in registered form only.

 

The ownership of registered shares is evidenced by the inscription of the name of the shareholder, the number of shares held by such shareholder and the amount paid on each share in the Company’s shareholders’ register. In addition, the Company’s articles of association provide that shares may be held through fungible securities accounts with financial institutions or other professional depositaries. Shares held through fungible securities accounts have the same rights and obligations as shares recorded in Company’s shareholders’ register.

 

Shares held through fungible securities accounts may be transferred in accordance with customary procedures for the transfer of securities in book-entry form. Shares that are not held through fungible securities accounts may be transferred by a written statement of transfer signed by both the transferor and the transferee or their respective duly appointed attorney-in-fact and recorded in the Company’s shareholders’ register. The transfer of shares may also be made in accordance with the provisions of Article 1690 of the Luxembourg Civil Code. As evidence of the transfer of registered shares, the Company may accept any correspondence or other documents evidencing the agreement between transferor and transferee as to the transfer of registered shares.

 

BNP Paribas Securities Services, (Luxembourg branch), maintains the Company’s shareholders’ register.

 

Repurchase of Company Shares

 

The Company may repurchase its own shares in the cases and subject to the conditions set by the Luxembourg Companies Law and, in the case of acquisitions of shares or ADSs made through the NYSE, with any applicable laws and regulations of such market. See Item 16.E “Purchases of Equity Securities by the Issuer and Affiliated Purchasers” in the Company’s Annual Report for further information on the authorization granted on June 2, 2010, by the Company’s annual general shareholders meeting to the Company or its subsidiaries to repurchase the Company’s shares, including shares represented by ADRs.

Limitation on Securities Ownership

 

There are no limitations currently imposed by Luxembourg law or the articles of association on the rights of non-resident shareholders to hold or vote their shares.

 

Change in Control

 

None of our outstanding securities has any special control rights. The Company’s articles of association do not contain any provision that would have the effect of delaying, deferring or preventing a change in control of the Company and that would operate only with respect to a merger, acquisition or corporate restructuring involving the Company. In addition, the Company does not know of any significant agreements or other arrangements to which the Company is a party and which take effect, alter or terminate in the event of a change of control of the Company.

 

The following description of ADSs, together with the additional information we may include in any applicable prospectus supplement, is applicable to any international offering of ordinary shares represented by ADSs and evidenced by ADRs.

 

ADSs representing the Company’s ordinary shares are listed on the NYSE under the symbol “TX.” Trading on the NYSE began on February 1, 2006. As of December 6, 2010, a total of 2,004,743,442 shares were registered in the Company’s shareholder register.

 

As of January 28, 2011, a total of 27,364,319 ADSs were oustanding under Ternium’s ADS program. On January 28, 2011, the closing sales price for the ADSs on the NYSE was USD 38.30 per ADS.

 

The Bank of New York Mellon (formerly The Bank of New York) is the depositary for the Company’s ADSs. Each of our ADSs represents an ownership interest in ten of our shares deposited with the custodian, as agent of the depositary, under the deposit agreement among the Company, the depositary and all registered holders and beneficial owners of ADSs. Each ADS will also represent any securities, cash or other property deposited with the depositary but which have not been distributed directly to ADS holders. ADSs are evidenced by ADRs.

 

The depositary’s office is located at 101 Barclay Street, New York, New York 10286.

 

Investors may hold our ADSs either directly or indirectly through brokers or other financial institutions. If you hold our ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADS holder. This description assumes you hold our ADSs directly. If you hold our ADSs through your broker or financial institution nominee, you must rely on the procedures of your broker or financial institution to assert the rights of an ADS holder described in this section. You should consult with your broker or financial institution to find out what those procedures are.

 

As an ADS holder, we will not treat you as one of our shareholders and you will not have shareholder rights. Luxembourg law governs shareholders rights. The depositary will be the holder of the shares underlying your ADSs. As a holder of ADSs, you will have ADS holder rights.

 

Certain shareholders rights under Luxembourg law, including the right to vote, to receive dividends and distributions, to bring actions, to examine the books and records and to exercise appraisal rights may not be available to holders of ADSs, or may be subject to restrictions and special procedures for their exercise. Holders of ADSs only have those rights that are expressly granted to them in the deposit agreement. The depositary, through its custodian, is the registered shareholder of the deposited securities and therefore only the depositary can exercise the shareholders rights in connection with the deposited securities. For example, if we make a distribution in the form of securities, the depositary is allowed, at its discretion, to sell that right to acquire those securities on your behalf and to instead distribute the proceeds to you. The deposit agreement sets out ADS holder rights and the procedures for the exercise of such rights as well as the rights and obligations of the depositary. New York law governs the deposit agreement and the ADSs.

 

The following is a summary of the material terms of the deposit agreement. Because it is a summary, it does not contain all the information that may be important to you. For more complete information, you should read the entire deposit agreement and the form of ADS which contains the terms of ADSs. You can read a copy of the form of deposit agreement which is filed as an exhibit to and incorporated herein by reference from the registration statement on Form F-6 for the ADSs, filed with the SEC on January 11, 2006 (File No. 333-130952). You may also obtain a copy of the deposit agreement at the SEC’s public reference room. See “Available Information.”

 

Share dividends and other distributions

 

We may make various types of distributions with respect to our shares. The depositary has agreed to pay to you the dividends or other distributions it or the custodian receives on shares or other deposited securities, after deducting its fees and expenses and any amount required to be withheld on account of taxes or other governmental charges. You will receive these distributions in proportion to the number of underlying shares that your ADSs represent.

Except as stated below, to the extent the depositary is legally permitted it will deliver the distributions to ADS holders in proportion to their interests in the following manner:

 

 

 

 

 

 

 

We have no obligation to file a registration statement under the Securities Act in order to make any rights available to ADS holders. ADS holders in the United States may not be able to exercise pre-emptive rights and/or receive other distributions if such securities are not registered under the Securities Act or exempted from such requirement. If the depositary is not permitted or is otherwise unable to sell any rights, such rights may lapse with no consideration received by ADS holders.

The depositary may choose any practical method of distribution for any specific ADS holder, including the distribution of foreign currency, securities or property, or it may retain the items, without paying interest on or investing them, on behalf of the ADS holder as deposited securities.

 

The depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any ADS holders.

 

The depositary may not be able to convert any currency at a specified exchange rate or sell any property, rights, shares or other securities at a specified price, and these transactions may not be completed within a specified time period.

 

Deposit of ADSs

 

The depositary will deliver ADSs if you or your broker deposits shares or evidence of rights to receive shares with the custodian.

 

Shares deposited in the future with the custodian must be accompanied by certain documents, including instruments showing that the shares have been properly transferred or endorsed to the person on whose behalf the deposit is being made. Shares may be so deposited through the electronic transfer of shares to the account maintained by the custodian for that purpose.

 

The custodian will hold all deposited shares for the account of the depositary.

 

The custodian will also hold any additional securities, property and cash received on or in substitution for the deposited shares. The deposited shares and any additional items are referred to as “deposited securities.”

 

Upon each deposit of shares, receipt of related delivery documentation and compliance with the other provisions of the deposit agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will deliver an ADR or ADRs in the name of the person entitled thereto evidencing the number of ADSs to which the person is entitled. ADRs will be delivered at the depositary’s principal New York office or any other location that it may designate as its transfer office.

 

Surrender of ADSs and withdrawal of shares

 

When you turn in your ADSs at the depositary’s office, the depositary will, upon payment of applicable fees, charges and taxes, and upon receipt of proper instructions (in accordance with the terms of the deposit agreement), deliver the underlying shares in accordance with your instructions.

 

The depositary may only restrict the withdrawal of deposited securities in connection with the following conditions set forth in paragraph I(A)(1) of the General Instructions (or any successor provisions thereto) to Form F-6 (as the same may be amended from time to time):

 

 

Voting rights

 

You may not attend or directly exercise voting rights in shareholders’ meetings but you may instruct the depositary how to exercise the voting rights for the shares which underlie your ADSs. Each of your ADSs represents ten shares. After receiving voting materials from us, if we ask it to, the depositary will notify the ADS holders of any shareholders’ meeting or solicitation of consents or proxies. This notice will describe how you may instruct the depositary to exercise the voting rights for the shares which underlie your ADSs. For instructions to be valid, the depositary must receive them on or before the date the depositary will set. The depositary will try, as far as is practical, subject to the provisions of and governing the underlying shares or other deposited securities, to vote or to have its agents vote the shares or other deposited securities as you instruct. The depositary will only vote or attempt to vote as you instruct. The depositary will not itself exercise any voting discretion. If we asked the depositary to solicit your instructions and the depositary does not receive voting instructions from you by the specified date, it

will consider you to have authorized and directed it to give a discretionary proxy to a person designated by the Company to vote the number of deposited securities represented by your ADSs, in favor of any proposal or recommendations made by the Company. The depositary will give a discretionary proxy in those circumstances to vote on all questions to be voted upon unless we notify the depositary that:

 

 

Neither the depositary nor its agents are responsible for any failure to carry out any voting instructions, for the manner in which any vote is cast or for the effect of any vote.

 

There is no guarantee that you will receive voting materials in time to instruct the depositary to vote and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.

 

Record dates