Obligation GerdauCorp 4.75% ( USG3925DAB67 ) en USD

GerdauCorp

100 % ▼

Bresil

USG3925DAB67 ( en USD )

4.75% par an ( paiement semestriel )

14/04/2023 - Obligation échue

Prospectus brochure de l'obligation Gerdau USG3925DAB67 en USD 4.75%, échue

200 000 USD

750 000 000 USD

G3925DAB6

BBB- ( Qualité moyenne inférieure )

N/A

Gerdau est une entreprise sidérurgique brésilienne multinationale produisant de l'acier long et des produits connexes pour la construction, l'industrie et l'agriculture.

L'obligation Gerdau (ISIN : USG3925DAB67, CUSIP : G3925DAB6), émise au Brésil en USD pour un montant total de 750 000 000 USD avec un coupon de 4,75% et une échéance le 14/04/2023, a été remboursée à 100% à sa maturité, avec une taille minimale d'achat de 200 000 USD et des paiements semestriels, bénéficiant d'une notation BBB- par Standard & Poors.

OFFERING MEMORANDUM
US$750,000,000
GERDAU TRADE INC.
(incorporated with limited liability in the British Virgin Islands)
4.750% Bonds Due 2023
Unconditionally and irrevocably guaranteed by
Gerdau S.A.
Gerdau Açominas S.A.
Gerdau Aços Longos S.A.
Gerdau Aços Especiais S.A.
(Each incorporated in the Federative Republic of Brazil)
Gerdau Trade Inc., which we refer to as the "Issuer," has offered US$750,000,000 aggregate principal amount of its 4.750% guaranteed bonds,
which we refer to as the "bonds." The bonds were initially sold to investors at a price equal to 99.020% of the principal amount thereof. Interest
on the bonds will accrue at a rate of 4.750% per year and will be payable semi-annually in arrears on April 15 and October 15 of each year,
commencing on October 15, 2013.
The bonds will mature on April 15, 2023. The Issuer may, at its option, redeem the bonds, in whole but not in part, at 100% of their principal
amount plus accrued interest at any time upon the occurrence of specified events relating to applicable tax law, as described under "Description
of the Bonds--Early Redemption." The bonds will also be repayable prior to maturity thereof upon the occurrence of a change of control as
described herein. See "Description of the BondsCovenantsRepurchase of Bonds upon a Change of Control."
The bonds will be unconditionally and irrevocably, jointly and severally, guaranteed by Gerdau S.A., the ultimate holding company of Gerdau
Trade Inc., which we refer to as the "Company," and its majority-owned Brazilian subsidiaries Gerdau Açominas S.A., Gerdau Aços Longos S.A.
and Gerdau Aços Especiais S.A., which, collectively, we refer to as the "Guarantors". The assets of the Guarantors represent in the aggregate
95% of the Net Assets of Gerdau consolidated group. The EBITDA of the Guarantors represent in the aggregate 81% of the EBITDA of Gerdau
consolidated group.
The bonds will be senior unsecured obligations of the Issuer, ranking equal in right of payment with all of the Issuer's other existing and future
senior unsecured debt. The guarantees of the bonds rank pari passu with all unsecured and unsubordinated obligations of each of the Guarantors.
Application has been made to list the bonds in the Official List of the Luxembourg Stock Exchange and to trade the bonds on the Euro MTF
Market of that exchange, which we refer to as "Euro MTF". See "Listing and General Information."
_________________________________________
Investing in the bonds involves risks. See "Risk Factors" beginning on page 13.
_________________________________________
Price: 99.020%
The bonds and the guarantees of the bonds have not been registered under the U.S. Securities Act of 1933, as amended, which we refer to as the
"Securities Act," or under any state securities laws. Therefore, the bonds were not offered or sold within the United States to, or for the account
or benefit of, any U.S. person unless the offer or sale would qualify for a registration exemption from the Securities Act and applicable state
securities laws. Accordingly, the bonds were offered and sold (1) to qualified institutional buyers (as defined in Rule 144A under the Securities
Act) and (2) to non-U.S. persons outside the United States in compliance with Regulation S under the Securities Act. See "Notice to Investors"
for additional information about eligible offerees and transfer restrictions. To the extent that the offering of the bonds was made to persons
within the European Economic Area, it has been exclusively made to "qualified investors" within the meaning of EU Directive 2003/71/EC,
which we refer to as the "Prospectus Directive," and therefore was exempted from the requirement to publish a compliant prospectus under the
Prospectus Directive.
The bonds were delivered to purchasers in book-entry form through The Depository Trust Company and its direct and indirect participants,
including Clearstream Banking, S.A. Luxembourg and Euroclear Bank S.A./N.V., as operator of the Euroclear System, on April 15, 2013.
Joint Bookrunners
J.P. Morgan
Morgan Stanley
Co-Managers
BNP PARIBAS Mitsubishi UFJ Securities
Standard Chartered Bank
May 29, 2013

You should rely only on the information contained in this offering memorandum. Neither the
Company nor the Issuer have authorized anyone to provide you with different information. The initial
purchasers are not and the Company and the Issuer are not making an offer of the bonds in any
jurisdiction where the offer is not permitted. You should not assume that the information contained in
this offering memorandum is accurate as of any date other than the date on the cover of this offering
memorandum regardless of the time of delivery of this offering memorandum or of any sale of the bonds.
_______________
TABLE OF CONTENTS
Page
PRESENTATION OF FINANCIAL AND OTHER INFORMATION.............................................................. iv
WHERE YOU CAN FIND MORE INFORMATION........................................................................................ vi
INCORPORATION BY REFERENCE.............................................................................................................. vi
FORWARD-LOOKING STATEMENTS .........................................................................................................vii
SUMMARY......................................................................................................................................................... 1
SUMMARY OF THE OFFERING...................................................................................................................... 7
SUMMARY FINANCIAL AND OTHER INFORMATION OF GERDAU .................................................... 11
RISK FACTORS................................................................................................................................................ 14
USE OF PROCEEDS......................................................................................................................................... 16
EXCHANGE RATES ........................................................................................................................................ 17
CAPITALIZATION OF GERDAU................................................................................................................... 18
DESCRIPTION OF THE BONDS .................................................................................................................... 19
FORM OF BONDS............................................................................................................................................ 37
TAXATION....................................................................................................................................................... 41
EUROPEAN UNION DIRECTIVE ON TAXATION OF SAVINGS INCOME ............................................. 46
ERISA AND CERTAIN OTHER CONSIDERATIONS................................................................................... 48
NOTICE TO INVESTORS................................................................................................................................ 50
ENFORCEMENT OF CIVIL LIABILITIES..................................................................................................... 53
PLAN OF DISTRIBUTION .............................................................................................................................. 55
LEGAL MATTERS........................................................................................................................................... 62
INDEPENDENT ACCOUNTANTS ................................................................................................................. 62
LISTING AND GENERAL INFORMATION .................................................................................................. 63
Unless otherwise indicated or the context otherwise requires, all references in this offering
memorandum to (i) the "Issuer" refer to Gerdau Trade Inc., a company incorporated with limited liability in the
British Virgin Islands, or "BVI", (ii) "Gerdau," "the Company" or similar terms refer to Gerdau S.A., a
corporation organized under the laws of the Federative Republic of Brazil, which we refer to as "Brazil," and its
consolidated subsidiaries, (iii) the "Guarantors" refer to Gerdau S.A., Gerdau Açominas S.A., which we refer to
as "Gerdau Açominas," Gerdau Aços Longos S.A., which we refer to as "Gerdau Aços Longos," and Gerdau
Aços Especiais S.A., which we refer to as "Gerdau Aços Especiais," and (iv) "Gerdau Ameristeel" refer to
Gerdau Ameristeel Corp., a corporation organized under the laws of the Province of Ontario, Canada, and
wholly-owned subsidiary of Gerdau.
The Company and the Issuer are relying on an exemption from registration under the Securities Act for
offers and sales of securities that do not involve a public offering. By purchasing bonds, you will be deemed to
have made the acknowledgments, representations, warranties and agreements described under "Notice to
Investors" in this offering memorandum.
i

You should understand that you will be required to bear the financial risks of your investment for an
indefinite period of time.
The Company and the Issuer have submitted this offering memorandum to a limited number of
investors so that they can consider a purchase of the bonds. Neither the Company nor the Issuer have authorized
its use for any other purpose.
The Company and the Issuer, having made all reasonable inquiries, confirm that, as of the date of this
offering memorandum, the information contained in this offering memorandum with regard to the Issuer, the
Company and the other Guarantors is true and accurate in all material respects, that the opinions and intentions
expressed in this offering memorandum are honestly held, and that there are no other facts the omission of
which would make this offering memorandum as a whole or any of such information or the expression of any
such opinions or intentions misleading in any material respect. The Company and the Issuer accept
responsibility accordingly.
In making an investment decision, you must rely on your own examination of the Company and the
terms of the offering and the bonds, including the merits and risks involved.
In connection with this offering, the initial purchasers may over-allot bonds or effect transactions with
a view to supporting the market price of the bonds at a level higher than that which might otherwise prevail.
However, there is no assurance that the initial purchasers will undertake stabilization action. Any stabilization
action may begin on or after the date on which adequate public disclosure of the terms of the offer of the bonds
is made and, if begun, may be ended at any time, but it must end no later than the earlier of 30 days after the
issue date of the bonds and 60 days after the date of the allotment of the bonds.
The initial purchasers assume no responsibility for, and make no representation or warranty, express or
implied, as to the accuracy or completeness of the information contained in this offering memorandum. Nothing
contained in this offering memorandum is, or shall be relied upon as, a promise or representation by the initial
purchasers as to the past or future. The initial purchasers accept no responsibility in relation to the information
contained in this offering memorandum or any other information provided by the Company, the Issuer or any of
the Guarantors in connection with the bonds.
No representation is being made to any purchaser of the bonds regarding the legality of an investment
in the bonds by such purchaser under any investment or similar laws or regulations. You should not consider
any information in this offering memorandum to be legal, business or tax advice. You should consult your own
attorney, accountant, business advisor and tax advisor for legal, financial, business and tax advice regarding an
investment in the bonds.
Neither the U.S. Securities and Exchange Commission, which we refer to as the "SEC," nor any state
securities commission has approved or disapproved of these securities or determined if this offering
memorandum is truthful or complete. Any representation to the contrary is a criminal offense.
With respect to the United Kingdom, this document is only being distributed to, and is only directed at,
(1) persons who are outside the United Kingdom, (2) persons that are qualified investors ("qualified investors")
within the meaning of Article 2(1)(e) of the Prospectus Directive (as defined below) who are also investment
professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion)
Order 2005 (as amended), which we refer to as the "Order," or (3) high net worth entities falling within Article
49(2) of the Order; or (4) other persons to whom it may be lawfully communicated (all such persons together
being referred to as "relevant persons"). The bonds are only available in the United Kingdom to, and any
invitation, offer or agreement to subscribe, purchase or otherwise acquire such bonds will be engaged in only
with, relevant persons. Any person in the United Kingdom who is not a relevant person should not act or rely
on this document or any of its contents. See "Plan of Distribution."
This Offering Memorandum constitutes a Prospectus for the purpose of Luxembourg law dated July
10th, 2005 on Prospectus for Securities.
ii

NOTICE TO NEW HAMPSHIRE RESIDENTS
NEITHER THE FACT THAT A REGISTRATION STATEMENT OR AN APPLICATION
FOR A LICENSE HAS BEEN FILED UNDER RSA 421-B WITH THE STATE OF NEW HAMPSHIRE
NOR THE FACT THAT A SECURITY IS EFFECTIVELY REGISTERED OR A PERSON IS
LICENSED IN THE STATE OF NEW HAMPSHIRE CONSTITUTES A FINDING BY THE
SECRETARY OF STATE THAT ANY DOCUMENT FILED UNDER RSA 421-B IS TRUE,
COMPLETE AND NOT MISLEADING. NEITHER ANY SUCH FACT NOR THE FACT THAT AN
EXEMPTION OR EXCEPTION IS AVAILABLE FOR A SECURITY OR A TRANSACTION MEANS
THAT THE SECRETARY OF STATE HAS PASSED IN ANY WAY UPON THE MERITS OR
QUALIFICATION OF, OR RECOMMENDED OR GIVEN APPROVAL TO, ANY PERSON,
SECURITY OR TRANSACTION. IT IS UNLAWFUL TO MAKE OR CAUSE TO BE MADE TO ANY
PROSPECTIVE PURCHASER,
CUSTOMER OR CLIENT ANY REPRESENTATION
INCONSISTENT WITH THE PROVISIONS OF THIS PARAGRAPH.
iii

PRESENTATION OF FINANCIAL AND OTHER INFORMATION
General
The Company's audited consolidated financial statements as of December 31, 2012 and 2011, and for
each of the three years ended December 31, 2012, which are incorporated by reference in this offering
memorandum to the Company's Annual Report on Form 20-F for the year ended December 31, 2012 filed with
the SEC on March 28, 2013, which we refer to as the "2012 Annual Report," has been presented in Brazilian
reais and prepared in accordance with International Financial Reporting Standards, which we refer to as "IFRS,"
as issued by the International Accounting Standards Board, which we refer to as the "IASB." The 2012 Annual
Report may be obtained free of charge at the office of the paying agent in Luxembourg.
Gerdau's operations are located in Argentina, Brazil, Canada, Chile, Colombia, Dominican Republic,
Guatemala, India, Mexico, Peru, Spain, the United States, Uruguay and Venezuela. The local currency is the
functional currency for those operations. The financial statements of the subsidiaries located outside Brazil,
which already prepare their financial statements in Brazilian reais, are translated from the functional currency
into Brazilian reais. Such financial statements have been translated into Brazilian reais following the criteria
established in International Accounting Standard, which we refer to as "IAS," No. 21, "The Effects of Changes
in Foreign Exchange Rates" from the financial statements expressed in the local currency of the countries where
the Company and each of its subsidiaries operate. Under such criteria assets and liabilities are translated at the
exchange rate in effect at the end of each year and average exchange rates are used for the translation of
revenues, expenses, gains and losses in the statement of income. Capital contributions, treasury stock
transactions and dividends are translated using the exchange rate as of the date of the transaction. Translation
gains and losses resulting from the translation methodology described above are recorded directly in
"Cumulative translation difference" within Equity. Gains and losses on foreign-currency denominated
transactions are included in the consolidated statements of income.
All references in this offering memorandum to "real," "reais" or "R$" are to the currency of Brazil.
All references in this offering memorandum to "U.S. dollars," "dollars" or "US$" are to the currency of the
United States of America. You should not construe these translations as representations by us that the real
amounts actually represent these U.S. dollar amounts or could be converted into U.S. dollars at the rates
indicated. See "Presentation of Financial and Other Information" and "Exchange Rates" for more detailed
information regarding exchange rates for the Brazilian currency.
Gerdau Operating Segments
The Company sells its products to a diversified list of customers for use in the construction,
manufacturing and agricultural industries. Shipments by the Company's Brazilian operations include both
domestic and export sales. Most of the shipments by the Company's business operations in North and Latin
America (except Brazil) are aimed at their respective local markets.
The Company's corporate governance establishes business segmentation, as follows:

Brazil (Brazil Business Operation) -- includes the operations in Brazil (except special steel)
and the metallurgical and coking coal operation in Colombia;

North America (North America Business Operation) -- includes all North American
operations, except Mexico and special steel;

Latin America (Latin America Business Operation) -- includes all Latin American operations,
except the operations in Brazil and the metallurgical and coking coal operations in Colombia;

Special Steel (Special Steel Business Operation) -- includes the special steel operations in
Brazil, Spain, United States and India.
Installed Capacity and Shipments
As used in this offering memorandum:
iv

"installed capacity" means the annual projected capacity for a particular facility (excluding
the portion that is not attributable to the Company's participation in a facility owned by a
jointly-controlled entities and associate companies), calculated based upon operations for
24 hours each day of a year and deducting scheduled downtime for regular maintenance;
"tonne" means a metric tonne, which is equal to 1,000 kilograms or 2,204.62 pounds; and
"consolidated shipments" means the combined volumes shipped from all the Company's
operations in Brazil, Latin America, North America and Special Steel, excluding the
Company's jointly-controlled entities and associate companies.
Rounding
The Company has made rounding adjustments to reach some of the figures included in this offering
memorandum. As a result, numerical figures shown as totals in some tables may not be an arithmetic
aggregation of the figures that preceded them.
Market Information
The Company makes statements in this offering memorandum about its competitive position and
market share in, and the market size of, the steel industry. These statements are based on statistics and other
information from third-party sources that the Company believes are reliable. The Company derived this third-
party information principally from reports published by the International Iron and Steel Institute, which we refer
to as "IISI," Brazilian Steel Institute Instituto Aço Brasil, and the Commodities Research Unit, which we refer
to as the "CRU," among others. Although the Company has no reason to believe that any of this information or
these reports are inaccurate in any material respect, the Company has not independently verified the competitive
position, market share and market size or market growth data provided by third parties or by industry or general
publications.
v

WHERE YOU CAN FIND MORE INFORMATION
To comply with Rule 144A under the Securities Act in connection with resale of the bonds, the Issuer
is required to furnish upon request of a holder of a bond, each a "holder," or of a prospective purchaser
designated by such holder the information required to be delivered under Rule 144A(d)(4) under the Securities
Act if, at the time of such request, the Issuer is neither a reporting company under Section 13 or Section 15(d) of
the Securities Exchange Act of 1934, as amended, which we refer to as the "Exchange Act," nor exempt from
reporting pursuant to Rule 12g3-2(b) thereunder. The Company will agree to furnish the information necessary
in order to permit the compliance by the Issuer with the information delivery requirements under Rule
144A(d)(4) under the Securities Act.
Gerdau S.A. is a reporting company subject to the informational requirements of the Exchange Act
and, in accordance therewith, files reports and other information with the SEC. As foreign private issuer, Gerdau
S.A. is exempt from the Exchange Act rules regarding the provision and control of proxy statements and
regarding short-swing profit reporting and liability. Such reports and other information can be inspected and
copied at the public references facilities of the SEC at Room 1580, 100 F Street N.E., Washington, D.C. 20549.
Copies of such material can also be obtained at prescribed rates by writing to the Public Reference Section of
the SEC at 100 F Street, N.E., Washington, D.C. 20549. Gerdau S.A. files materials with, and furnishes
material to, the SEC electronically using the EDGAR System. The SEC maintains an Internet site that contains
these materials at www.sec.gov. In addition, such reports, and other information concerning Gerdau S.A. can be
inspected at the offices of the New York Stock Exchange, Inc., 20 Broad Street, New York, New York 10005,
on which equity securities of Gerdau S.A. are listed.
INCORPORATION BY REFERENCE
The Company's 2012 Annual Report is incorporated by reference herein. You may request a copy of
this filing, at no cost, either by contacting Gerdau S.A. at the number or address specified below, or at the office
of the paying agent in Luxembourg..
________________
Gerdau's principal executive office, as well as that for the other Guarantors, is at Av. Farrapos 1811,
CEP 90220-005, Porto Alegre, Rio Grande do Sul, Brazil, and the telephone number at this address is (+55-51)
3323-2000.
vi

FORWARD-LOOKING STATEMENTS
This offering memorandum contains forward-looking statements within the meaning of the Private
Securities Litigation Act of 1995. These statements relate to the Company's future prospects, developments and
business strategies.
Statements that are predictive in nature, that depend upon or refer to future events or conditions or that
include words such as "expects," "anticipates," "intends," "plans," "believes," "estimates" and similar
expressions are forward-looking statements. Although the Company believes that these forward-looking
statements are based upon reasonable assumptions, these statements are subject to several risks and uncertainties
and are made in light of information currently available to the Company.
It is possible that the Company's future performance may differ materially from its current assessments
due to a number of factors, including the following:

general economic, political and business conditions in the Company's markets, both in Brazil and
abroad, including demand and prices for steel products;

interest rate fluctuations, inflation and exchange rate movements of the real in relation to the U.S.
dollar and other currencies in which the Company sells a significant portion of its products or in
which its assets and liabilities are denominated;

the Company's ability to obtain financing on satisfactory terms;

price and availability of steel scrap, energy and other raw materials;

changes in international trade;

changes in laws and regulations;

electric energy shortages and government responses to them;

the performance of the Brazilian and the global steel industries and markets;

global, national and regional competition in the steel market;

protectionist measures imposed by steel-importing countries; and

other factors identified or discussed under "Item 3.D. Risk Factors," in our 2012 Annual Report,
incorporated by reference herein.
The Company's forward-looking statements are not guarantees of future performance, and the actual
results or developments may differ materially from the expectations expressed in the forward-looking
statements. As for the forward-looking statements that relate to future financial results and other projections,
actual results will be different due to the inherent uncertainty of estimates, forecasts and projections. Because of
these uncertainties, potential investors should not rely on these forward-looking statements.
The Company undertakes no obligation to publicly update any forward-looking statement, whether as a
result of new information, future events or otherwise.
vii

SUMMARY
This summary highlights information presented in greater detail elsewhere in this offering memorandum. This
summary is not complete and does not contain all the information you should consider before investing in the bonds.
You should carefully read this entire offering memorandum before investing, including "Risk Factors," the
Company's consolidated financial statements included in its 2012 Annual Report, incorporated by reference herein.
See "Presentation of Financial and Other Information" and "Summary Financial and Other Information of
Gerdau" for information regarding the Company's consolidated financial statements.
Gerdau
Overview
According to the Brazilian Steel Institute (IABr - Instituto Aço Brasil), Gerdau is Brazil's largest producer
of long rolled steel. Gerdau holds significant market share in the steel industries of almost all countries where it
operates and has been classified by World Steel Association as the world's 14th largest steel producer based on its
consolidated crude steel production in 2011 (last date for which information is available).
Gerdau operates steel mills that produce steel by direct iron-ore reduction (DRI) in blast furnaces and in
electric arc furnaces (EAF). In Brazil, it operates four integrated steel mills, including its largest mill, Ouro Branco,
an integrated steel mill located in the state of Minas Gerais. The Company currently has a total of 61 steel producing
facilities globally, including jointly-controlled entities and associate companies. The jointly-controlled entity is
Gallatin Steel Company, located in the United States for the production of flat rolled steel. The associate companies
are Aceros Corsa in Mexico; Corporación Centroamericana del Acero in Guatemala; and INCA in the Dominican
Republic.
In the year ended December 31, 2012, approximately 38% of all physical sales volumes was generated
from the Brazil Business Operation, 34% from the North America Business Operation, 14% from the Latin
American Business Operation and 14% from the Special Steel Business Operation.
As of December 31, 2012, total consolidated installed capacity, excluding the Company's investments in
jointly-controlled entities and associate companies, unconsolidated companies, was approximately 25.7 million
tonnes of crude steel and 21.5 million tonnes of long rolled steel products. In the same period, the Company had
total consolidated assets of R$53.1 billion, consolidated net sales of R$38.0 billion, total consolidated net income
(including non-controlling interests) of R$1.5 billion and shareholders' equity (including non-controlling interests)
of R$28.8 billion.
Gerdau offers a wide array of steel products, which are manufactured according to an extensive variety of
customer specifications. Its product mix includes crude steel (slabs, blooms and billets) sold to rolling mills, finished
products for the construction industry such as rods and structural bars, finished products for use in the consumer
goods industry such as commercial rolled steel bars and machine wire and products for farming and agriculture such
as poles, smooth wire and barbed wire. Gerdau also produces special steel products, normally with a certain degree
of customization, utilizing advanced technology, for the manufacture of tools and machinery, chains, locks and
springs, mainly for the automotive and mechanical industries.
A significant and increasing portion of Gerdau's steel production assets is located outside Brazil,
particularly in the United States and Canada, as well as in Latin America and Europe. The Company began its
expansion into North America in 1989, when consolidation in the global steel market effectively began. The
Company currently operates 19 steel production units in the United States and Canada through its principal entity,
Gerdau Ameristeel, and believes that it is one of the market leaders in North America in terms of production of
certain long steel products, such as rods, commercial rolled steel bars, extruded products and girders.
The Company's operating strategy is based on the acquisition or construction of steel mills located close to
its customers and sources of the raw materials required for steel production, such as scrap metal, pig iron and iron
ore. For this reason, most of its production has historically been geared toward supplying the local markets in which
it has production operations. However, the Company also exports a significant portion of its production mainly to
Asia and elsewhere in South America.
1

Through its subsidiaries and affiliates, the Company also engages in other activities related to the
production and sale of steel products, including reforestation; electric power generation projects; coking coal, iron
ore and pig iron production; as well as fabrication shops and downstream operations.
The Company maintains insurance coverage in amounts that it believes suitable to cover the main risks of
its operating activities. The Company has purchased insurance for its Ouro Branco mill to insure against casualty
and operating losses. The declared insurable value of the Ouro Branco mill is approximately US$4.6 billion (R$9.4
billion as of April 30, 2012), including material damage to installations (US$3.3 billion) and loss of gross revenues
(US$1.3 billion), such as would arise from halts in production due to business interruptions caused by accidents for
a period up to twelve months. The Company's current insurance policy relating to the Ouro Branco mill remains
effective until April 30, 2013. The Company's mini-mills are also covered under insurance policies which insure
against certain operational losses resulting from business interruptions.
Metalúrgica Gerdau S.A. is a holding company that controls, directly and indirectly, all Gerdau companies
in Brazil and abroad, including the Guarantors. See "Ownership and Capital Structure."
Business Strategy
The Company's goal is to produce high quality steel and steel related products in a cost effective manner
that satisfies both the needs of its customers and the goals of its security holders. The Company seeks to accomplish
the foregoing through the following measures:
Increase Market Share for Value-Added Products
The Company intends to focus on increasing its market share of value-added products that meet the specific
needs of its customers through advanced customization and technology. The three main markets in which the
Company operates are:

construction, to which it supplies rebars, merchant bars, nails and meshes,

manufacturing, to which it supplies bars for machinery and agricultural implements, tools and other
industrial products, and

agriculture, to which it supplies wires and posts for agricultural facilities and reforestation projects.
The Company also produces special steel products, normally with a certain degree of customization,
utilizing advanced technology, for the manufacture of tools and machinery, chains, locks and springs, mainly for the
automotive and mechanical industries. The Company intends to increase its market share of value-added products in
such a way as to directly meet the specific needs of its customers and, consequently, capture the higher prices paid
for these products.
In addition, the Company intends to add value to its products through rebar fabricating facilities and
downstream operations, such as epoxy coating and production of products with specialty sections, wire and nails,
cold-drawn products, elevator guide rails and super-light profiles. Finally, the Company intends to expand its
portfolio of products manufactured by the Company in Brazil, so as to operate in all Brazilian market segments,
including flat steel.
Increase Presence in Global Markets
In the fiscal year ended December 31, 2012, approximately 38% of all physical sales volumes was
generated from the Brazil Business Operation, 34% from the North America Business Operation, 14% from the
Latin American Business Operation and 14% from the Special Steel Business Operation. Outside of Brazil, the
Company has been pursuing a long term strategy of expanding through acquisitions of mills at which the Company
believes it can increase the profitability through its management expertise rather than through significant capital
investments. Over the years the Company has increased participation principally in the North American market and
2