LNM Holdings N'V' December 2002

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LNM Holdings N.V.December 2002
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Disclaimer
Iscor Limited shares are publicly traded on the
JSE Securities Exchange South Africa (the JSE)
lists. As such, Iscor Limited is regulated by the
JSE and is subject to the provisions of the
Listings Requirements of the JSE, The Insider
Trading Act 135 of 1998, the Companies Act 61 of
1973, as amended, and the Securities Regulation
Code on Takeovers and Mergers (collectively, the
Laws). This presentation will disclose
information (the Information) that is
considered inside information for the purposes of
the Laws. By attending at or participating in
this presentation you will be deemed to be an
insider for the purposes of the Laws. As such,
you will be prohibited from selling, transferring
or otherwise dealing with or trading in Iscor
Limited shares, and from disclosing or passing on
such Information, except in accordance with the
Laws or upon the release of all such Information
into the public domain. A public announcement is
expected to take place on Tuesday, 3 December
2002. This presentation contains forward-looking
statements that express or imply expectations of
future events or results. All forward-looking
statements involve a number of risks,
uncertainties and other factors, and LNM Holdings
N.V. (LNM) cannot give assurances that such
statements will prove to be correct. Risks,
uncertainties and other factors that could cause
actual events or results to differ from those
expressed or implied by the forward-looking
statements include, without limitation, the
satisfaction of closing conditions to any offer
made by LNM, the acceptance or rejection of any
agreement by regulators, delays in the regulatory
processes, changes in the economic or political
situation in South Africa, the European Union,
the United States of America and other relevant
jurisdictions, changes in the steel industry
within any such country or area or worldwide and
the performance of (and cost savings realised by)
Iscor Limited. Given these and other
uncertainties, you are cautioned not to place
undue reliance on any of the forward-looking
statements contained in this presentation or
otherwise. LNM assumes no responsibility for any
action you may take upon receipt of the
Information and you should form your own view as
to the merits or demerits of any offer that may
be made by LNM. LNM expressly draws your
attention to the above restrictions and
qualifications. Should you not wish to be subject
to the restrictions relating to insiders under
the Laws, you should not attend at or participate
in this presentation and you should inform LNM or
its financial advisers immediately.
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Partial Offer to Iscor Limited shareholders
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Agenda

• Background to LNM and The LNM Group
• LNMs involvement in Iscor Limited
• The Offer
• Appendix - additional information on The LNM Group

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Background to LNM and The LNM Group
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The LNM Group Overview

• Established in 1976 as a 60ktpa rod mill in
  Indonesia
• Now 2nd largest global steel producer
• The most global steel company in the world
• - vertically integrated steel making facilities
  in 11 countries
• - broad geographic and product diversification
• A successful track record in both advanced and
  emerging market economies
• Substantial experience turning around
  under-performing steelmaking assets
• Major supplier to E.U. and North American auto
  and appliance industry
• - two technical research centres
• Amongst the lowest cost steel producers in the
  world
• - both integrated and mini-mill processes of
  steelmaking
• LNM Holdings NV is a wholly owned member of the
  The LNM Group

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acquisition of Nova Hut agreed, pending
completion
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A Global Force in Steel
The LNM Group
LNM Holdings N.V. (The Netherlands Antilles)
Ispat International N.V. (The Netherlands)
P.T.Ispat Indo (Indonesia)
Ispat Sidbec (Canada)
Ispat Inland (USA)
Ispat Stahlwerk Ruhrort (Germany)
Ispat Sidex (Romania)
Ispat Karmet (Kazakhstan)
Ispat Annaba (Algeria)
Ispat Mexicana (Mexico)
Caribbean Ispat (Trinidad)
Ispat Hamburger Stahlwerke (Germany)
Ispat Unimetal (France)
Nova Hut (Czech republic)
Iscor Limited (South Africa)
Ispat Walzdraht Hochfeld (Germany)
I/N Tek I/N Kote
Trefileurope
One of the fastest growing steel companies in the
world
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34.81 investment acquisition agreed, pending
completion
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Global Presence
Ispat Inland (U.S.A.)
Ispat Sidbec (Canada)
Ispat International Limited (U.K.)
LNM Holdings N.V. Ispat International N.V. (The
Netherlands)
Ispat Hamburger Stahlwerke Ispat Stahlwerk
Ruhrort Ispat Walzdraht Hochfeld (Germany)
Ispat Karmet (Kazakhstan)
Nova Hut(Czech Republic)
Ispat Sidex (Romania)
Caribbean Ispat (Trinidad)
Ispat Mexicana (Mexico)
Ispat Unimetal (France)
Ispat Annaba (Algeria)
Ispat Indo (Indonesia)
Iscor Limited (South Africa)
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34.81 investment
acquisition agreed , pending completion
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World Class Facilities
In 000 MT
Capacity (mt)
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acquisition agreed , pending completion
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Global Management Philosophy

• Manage each subsidiary as a decentralised,
  incentive based and entrepreneurial business unit
• Continuous operational improvements through
  Knowledge Integration Programme (KIP)
• - implement best practice in each discipline
  through inter-company and industry-wide
  benchmarking
• Continuous focus on cost reduction and quality
  improvements
• Promotion of social harmony in each and every
  business unit
• Significant benefits from aggregated purchasing
  power and global marketing knowledge

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Turnaround Expertise

• LNM Group has established a reputation for
  improving the performance of steel producing
  assets globally
• Implementation of group-wide best practice to
  improve operations
• - lower costs
• - increase value added
• - improve quality
• Appropriate capital expenditure programmes for
  real improvements

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Turnaround Progress
Steel Shipments (000 MT)
Cost US / MT
9m in 2002
9m prior to
LNM Operating Subsidiary
9m prior to
9m in 2002
acquisition
Acquired
Acquisition
2,810
231
Karmet, Kazakhstan
1995
123
1,707
3,037
Sidex, Romania
237
2001
198
2,333
986
Annaba, Algeria
2001
637
337
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Figures for 9 months to 30 September 2002
In the 7 acquisitions of Ispat International,
similar performance was achieved - average
growth in steel shipments of 23 since
acquisition - average reduction in cost per
tonne of 21 since acquisition
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Market Leadership in our Chosen Markets
Group Customers Base - A Whos Who of Leaders in
Industry
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Building Leadership in the Global Steel Industry
Reputation for operating efficiency and product
quality
World class employee relations/HR practices
High quality, low cost assets
Customer service orientation
One of the worlds largest and fastest growing
steel producers
Product and geographic diversity
Significant organic growth
Asset optimization
Leader in steel technology
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LNMs involvement in Iscor Limited
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Background

• Entered into Business Assistance Agreement (BAA)
  in November 2001
• - approved by shareholders in January 2002
• - required LNM to invest US75 million in Iscor
  Limited equity
• - allows LNM to earn up to 10 of Iscor Limited
  upon reducing Iscor Limited cost base by R700
  million (in January 2002 money terms)
• Allows Iscor Limited to benefit from LNMs
  international expertise and proven operating
  track record
• LNM provides certain business, purchasing,
  marketing and technical assistance
• BAA designed to enhance earnings for benefit of
  all shareholders
• LNM has satisfied equity acquisition requirement
  and now owns 34.81 of Iscor Limited

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Share Price Evolution
Share price (R)
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Iscor Limited shareholders approve BAA
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LNM signs BAA
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266 UPLIFT
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5
0
N
D
J
F
M
A
M
J
J
A
S
O
N
ISCOR LIMITED
Source DATASTREAM and HSBC analysis
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Iscor Limited value unbundled
ISCOR LIMITED
Share price (rebased to 100)
Source DATASTREAM and HSBC analysis
KUMBA RESOURCES
Note Not adjusted for Iscor rights issue
LNM considers that the post unbundling benefits
for shareholders may be demonstrated through
Iscor Limiteds share price performance
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Actions taken under BAA

• A total of 31 group visits so far (17 LNM to
  Iscor 14 Iscor to LNM)
• Objective generate cost savings ideas, transfer
  knowledge help implement improved practices
• Some major areas of impact
• - Blast Furnace reline/ campaign extension,
  burden/ fuel rate optimization
• - Steelmaking refractory consumption, plant
  operation and maintenance issues
• - Rolling hot rolling maintenance training,
  quality inspection procedure for flat rolling,
  Wire Rod Bar operation and maintenance

INTERACTION WITH LNM
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Actions taken under BAA

• Iscor units participation in LNM KIPs on
  ironmaking/ steelmaking (Romania), wire rod
  (Germany), hot rolling (US) materials (Canada)
• Initiation of Iscors own KIP program with LNM
  assistance
• Significant sharing of expertise in e-sales/
  marketing, RD, capital project evaluation, yield
  optimisation and budgeting

KNOWLEDGE SHARING
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Actions taken under BAA

• Intensive benchmarking across operations from
  coke making to rolling, procurement,
  transportation logistics and IT among others
• Significant cost savings ideas generated mainly
  towards improvements in yield, productivity,
  maintenance, refractory, quality purchasing
• Assisted successful turnaround of the whole
  operation with record throughput

BENCHMARKING
SALDANHA
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Actions taken under BAA

• Effective savings in capital projects within all
  business units, particularly at VDB
• Recent focus on BF reline, Sinter plant upgrade,
  HSM automation, BOF De-sulphurisation, BOF
  Off-gas recovery and Coke oven gas cleaning
• Quick savings realized in
• - imported iron ore pellets procurement
• - imported coking coal transportation cost
• - imported refractories and electrodes
• Savings in various areas including IT are being
  captured

CAPITAL EXPENDITURE
PURCHASING
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Iscor Limited Results Since LNM Involvement
September quarter
y/e June
2001
2002
2001
2002
Rm
Net operating profit
609
1,308
153
885
- Flat products
460
842
86
524
- Saldanha Steel
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(247)
(46)
128
- Long products
159
679
102
223
- Suprachem
67
121
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- Group / other
(77)
(87)
(4)
(20)
Headline earnings / (loss)
(163)
480
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601
Headline earnings / (loss) per share (cents)
(54)
139
2.5
134.8
Source Iscor Limited published financial
statements
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The Offer
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Rationale
LNM wishes to increase its holding above 35 and
retain remuneration shares under the BAA LNM has
discussed its participation with - Iscor
Limited management - South African
Government LNM has concluded that Iscor Limited
should at this time - remain a South African
listed entity - have a sufficient free float to
ensure market liquidity Therefore a Partial Offer
has been structured to allow shareholders to sell
a portion of Iscor Limited shares to LNM LNM
believes shareholders should be given the
opportunity to sell a portion of their shares at
a premium LNM is seeking shareholder approval to
waive the requirement to make a mandatory offer
to shareholders
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Offer Terms

• LNM is making a partial offer in cash for up to
  12.19 of Iscor Limiteds issued shares
• Offer price of R30.00 per share
• Premium of
• - 38.2 over the closing price on 2 December
  2002
• - 18.6 over Iscor Limiteds all time closing
  high
• - 27.0 over 30 day volume weighted average
  closing price
• Shareholders may tender all or part of their
  holdings in Iscor Limited
• If more than 12.19 is tendered, LNM will
  pro-rate acceptances

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Source I-Net Bridge and HSBC
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Benefits for Iscor Limited
Access a greater level of technology Further
enhance co-ordination of purchasing and marketing
Further accelerate Iscor Limiteds
transformation into a world class producer In
LNMs view, the offer should not adversely affect
the - independence of Iscor Limited Board -
maintenance of arms length business relationship
between LNM and Iscor Limited - corporate
governance standards
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Conditions

• Approval by Iscor Limited shareholders in general
  meeting
• - shareholders to waive requirement to make a
  mandatory offer in respect of the partial
  offer
• Recommendation of Iscor Limited Board
• Approval by SRP
• No governmental or regulatory proceedings
  affecting the offer
• No material adverse change to Iscors property,
  plant and equipment, nor any reduction in
  profitability in excess of 50 per cent of current
  levels

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Indicative Timetable
3 December 2002 - Firm Intention Announcement 6
December 2002 - Post offer document 20 December
2002 - Board response and Notice of Meeting 17
January 2003 - EGM 24 January 2003 - Closing 29
January 2003 - Payment of consideration
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Additional information on The LNM Group
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Joint Ventures and Subsidiaries
Products Facility Capacity Percentage
Country (000) Ownership Raw Materials Iron
ore Minorca Mine 3,000 100 USA Iron ore Empire
Mine 8,000 40 USA Iron ore Peña Colorada
3,500 50 Mexico Iron ore Ispat
Tebessa 3,000 70 Algeria Iron ore

Lisakovski/Kentube/Atasu Mines 5,000 100 Kazakhst
an Pulverized coal PCI 700 50 USA Metallurgic
al Coal Karagandaugol 12,000 100 Kazakhstan Coke
Karagandaugol 7,000 100 Kazakhstan Downstream-Fla
t Cold rolled products I/N Tek 1,600 60 USA Galv
anized steel I/N Kote 1,100 50 USA Galvanized
sheet Sorevco 220 50 Canada Downstream-Wire /
Wire products Wire products Trefileurope
385 100 France Wire products Kent Wire (Ispat)
140 100 UK Wire products Walker-Wire
120 100 USA Wire products Acufil
100 100 Canada Wire products WDI
730 33.33 Germany Wire products Ispat
Wire 30 100 Indonesia Bright drawn bars SMR
100 100 France Other Pipes PMT
300 51 Mexico Pipes Delta Tube
Ltd 120 50 Canada Services Sersiin
50 Mexico Shipping company Ispat Shipping 585
DWT 100 UK Power Ispat Power 555
MW 100 Kazahkstan
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The LNM Group www.lnmnv.com
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