Venezuelan Tax Authorities Initiate Tax Assessment Against Sidor

Ternium S.A. announced today that, following the announcement of the Venezuelan government's intention to nationalize Sidor and the passing of legislation to that effect, the Venezuelan tax authorities initiated a tax assessment against Sidor involving income taxes for fiscal years 2003, 2004, 2005, 2006 and 2007 resulting in allegedly omitted payments in an aggregate principal amount of Venezuelan bolívares 1,438.6 million (or US$669.1 million). The tax assessment, which covers certain previously audited periods, alleges that Sidor improperly deducted certain payments for income tax purposes, primarily consisting of amounts paid to Ylopa - Serviços de Consultadoria, Ltd., a subsidiary of Ternium organized under the laws of Portugal, and Corporación Venezolana de Guayana, or CVG (a Venezuelan governmental entity and a shareholder of Sidor), under certain participation account agreements (contratos de cuentas en participación) entered into with Ylopa and CVG in connection with the restructuring of Sidor's financial debt in 2003. In addition, the tax assessment challenges, among other things, the adjustment of tax loss carry forwards corresponding to prior fiscal years.