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Caracas, April
10, 2001… International Briquettes Holding (IBH) reported that
Orinoco Iron, its 50%-owned affiliate, failed to make a $16.3
million scheduled interest payment on its bank credit facility
which was due on March 30, 2001. At March 30, about $625.0 million
was outstanding under the facility, of which IBH has guaranteed
about $312.5 million. On April 5, 2001, Orinoco Iron's lenders
under the facility sent a notice of default, but they have not
yet declared the loans under the facility to be due. IBH and Orinoco
Iron, together with BHP, the other 50% owner of Orinoco Iron,
are continuing to discuss the situation at Orinoco Iron with Orinoco
Iron's lenders and other interested parties, particularly the
possibility of additional sources of funding for the project.
However, no agreements have yet been reached with Orinoco Iron's
lenders or any other parties and no assurance can be given that
agreements necessary to permit the continued operation of the
project will be reached or as to the timing or terms of any such
agreements.
Orinoco Iron
has constructed a hot briquetted iron plant at Puerto Ordaz, Venezuela.
On March 26, 2001, IBH announced that as a result of a series
of mechanical failures which have delayed the buildup of production
at the plant and the depressed prices in the international markets,
revenues and cash flows for the project are substantially below
those planned and substantial additional funding for the project
will be required. As a consequence, IBH undertook a review of
operational and financial issues at Orinoco Iron with BHP. On
March 29, BHP announced that it would write off it equity investment
in the project, cease any further investment and increase its
provisions to cover its total financial obligations in respect
of the project. BHP also said that it would work with IBH and
Orinoco Iron to identify possible additional sources of funding
for the project.
This press
release contains statements about future events and financial
results that are forward-looking and subject to substantial risks
and uncertainties. Actual results could differ materially from
those indicated in such forward-looking statements. Factors which
may cause actual results to differ materially from those discussed
include economic considerations that could affect demand for HBI,
competition, general economic conditions in Venezuela and in the
global steel industry, the availability and terms of financing
and the risk factors set forth in IBH's various filings with the
U.S. Securities and Exchange Commission and the Comision Nacional
de Valores of Venezuela. IBH undertakes no obligation to revise
these forward-looking statements to reflect events or circumstances
after the date hereof, and claims the protection of the safe harbor
for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995.
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