Compañía Siderúrgica Huachipato. Capital Increase

1.      Deal Description

Guerrero Olivos represented Compañía Siderúrgica Huachipato S.A. (CSH), affiliate of open corporation CAP S.A., leading iron ore and pellets producer on the Pacific Coast, largest steel producer and the most important steel processing company in the country, in a USD43,1 million capital increase through the capitalization of several credits that its main shareholder, CAP S.A., held against the company.

The purpose of this transaction was to optimize CSH’s financial position and continue with its operative production.

The capital increase was executed under the strict rules of the regulator (Commission for the Financial Market) and in compliance with the related parties rules included in the Chilean Corporations Act, to guarantee the right of minority shareholders of having adequate information. Therefore, CSH delivered reports and valuations by independent experts in connection with the market value of the credits and of the convenience of the transaction for the company. In addition, the directors informed about the benefits of the operation for the company.

Complexity to this transaction is that it was an operation between related parties, hence it had to be developed under a strict protocol that included internal authorizations, report and valuations from independent experts and other tasks to ensure the protection of the minority shareholders’ interests.

Also, the shareholders meeting authorizing this transaction was held during the sanitary crisis, and we had to be prepared to the different scenarios based in the diverse and changing legal regulations and criteria the CMF has been adopting during these weeks in connection with the preparation and development of these meetings.

 2.      Counsel list

Counsel to CSH: Guerrero Olivos. 

Partners Roberto Guerrero V. and Tomás Kubick 

Associates César Gálvez and Jaime Antoñanzas

In-house counsel: CAP Group: Daniel Carvallo. CSH: Eduardo Carrasco 

3.      Date of closing

13/04/2020

4.      Deal Value

USD43,100,000

5.      Jurisdictions involved

Chile