SEC Info - Mittal Steel Co N.V. - ‘425’ on 10/26/04 re: Mittal Steel Co N.V.

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Mittal Steel Co N.V. – ‘425’ on 10/26/04 re: Mittal Steel Co N.V.

On: Tuesday, 10/26/04, at 4:59pm ET · Accession #: 947871-4-2422 · File #: 1-14666

  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

10/26/04  Mittal Steel Co N.V.              425                    1:67K  Mittal Steel Co N.V.              Shearman & Sterl… LLP/FA

Business-Combination Transaction Communication — Rule 425
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 425         Business-Combination Transaction Communication        29     87K 

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                             Filed by Ispat International N.V.
                                     Pursuant to Rule 425 under the Securities
                                    Act of 1933 and Deemed Filed Pursuant to
                                      Rule 14a-12 of the Securities Exchange Act
   of 1934
                                     Subject Company: Ispat International N.V.
                          Commission File No.: 001-14666

On October 25, 2004, the Ispat International N.V. broadcast a conference call   
through the Ispat International N.V. website to investors regarding its         
agreement to acquire LNM Holdings N.V. and its agreement to merge with          
International Steel Group Inc., the conference call was then made available for 
replay by investors on the Ispat International web site, what follows is a      
transcript of said conference call:                                             

You may obtain documents filed with the SEC by Ispat International free of      
charge if you request them in writing from Ispat International N.V. 15th Floor, 
Hofplein 20, 3032 AC Rotterdam, The Netherlands, or by telephone at             
+31 10 217 8800.  You may also obtain documents filed with the SEC by ISG free  
of charge if you request them in writing from Investor Relations, International 
Steel Group Inc., 4020 Kinross Lakes, Parkway, Richfield, Ohio 44286-9000, or   
by telephone at (330) 659-7430.                                                 

Conference Call Transcript                                                      
IST - Ispat/LNM/ISG Analyst/Investor Conference Call                            
Event Date/Time: Oct. 25. 2004 / 9:00AM ET                                      
Event Duration: N/A                                                             

CORPORATE PARTICIPANTS                                                          
Chuck Burgess                                                                 
Abernathy MacGregor Group - IR                                                
Wilbur Ross                                                                   
International Steel Group Inc. - Chairman                                     
Lakshmi Mittal                                                                
Mittal Steel Company - Chairman & CEO                                         
Aditya Mittal                                                                 
Mittal Steel Company - President & CFO                                        
Rodney Mott                                                                   
International Steel Group Inc. - President & CEO                              

CONFERENCE CALL PARTICIPANTS                                                    
Aldo Mazzaferro                                                               
Goldman Sachs - Analyst                                                       
Julien Onillion                                                               
HSBC Securities - Analyst                                                     
Wayne Atwell                                                                  
Morgan Stanley - Analyst                                                      
Michael Gambardella                                                           
JP Morgan - Analyst                                                           
Cavis Vanever (ph)                                                            
Analyst                                                                         
Anthony Rizzuto                                                               
Bear Stearns - Analyst                                                        
Bruce Klein                                                                   

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CSFB - Analyst                                                                
Chicagura Snowbec (ph)                                                        
CSFB - Analyst                                                                
Jeff (ph)                                                                     
Analyst                                                                         
Wayne Cooperman                                                               
Cobalt Capital Management - Analyst                                           
Brett Levy                                                                    
Jefferies & Company, Inc. - Analyst                                           
Charles Bradford                                                              
Bradford Soleil & Research - Analyst                                          
Dwayne Tennomer (ph)                                                          
First Capital Alliance - Analyst                                              

PRESENTATION                                                                    

Operator                                                                        

Good morning everyone and welcome to the morning's conference call. Joining us  
today are Mr. Lakshmi Mittal, Chairman and Chief Executive Officer of Mittal    
Steel Company N.V.; Aditya Mittal, President and Group CFO, Mittal Steel Company
N.V.; and Mr. Wilbur Ross Jr., Chairman of International Steel Group            
Incorporated. (OPERATOR INSTRUCTIONS) Now, I'll turn the call over to Chuck     
Burgess, please go ahead, sir.                                                  

Chuck Burgess  - Abernathy MacGregor Group - IR                               

I would like to remind you that this conference call contains forward-looking   
statements including statements regarding benefits of the proposed merger,      
integration plans and expected synergies, anticipated future financial and      
operating performance and results, including estimates for growth and           
expectations for our products and plans for development and expansion of our    
pipeline. These statements are based on our respective management's current     
expectations. There are a number of risks and uncertainties that could cause    
actual results to differ materially. For example, we may be unable to obtain    
shareholder or regulatory approvals required for the merger. Problems may arise 
in successfully integrating our businesses. The transactions may involve        
unexpected costs. We may be unable to achieve cost-cutting synergies. Our       
businesses may suffer as a result of uncertainty surrounding the transactions.  
The market for our products may change or be impacted by competition, new data, 
supply issues, or marketplace trends.                                           

For more detailed information on the risks and uncertainties associated with    
Ispat International's and ISG's business activities, see our respective reports 
filed with the Securities and Exchange Commission. The companies undertake no   
obligation to publicly update their forward-looking statements, whether as a    
result of new information, future events, or otherwise.                         

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Ispat International intends to file with the Securities and Exchange Commission 
a registration statement on Form F-4 that will include a proxy statement of ISG 
and a prospectus of Ispat International and other relevant documents in         
connection with the proposed transaction. In addition, Ispat International will 
publish and make available to shareholders of Ispat International, and file with
Euronext Amsterdam N.V., a prospectus. Investors and security holders are urged 
to read the prospectus regarding the acquisition when it becomes available      
because it will contain important information and to exclusively base their     
investment decision on this prospectus once available. Investors and security   
holders of Ispat International and ISG are urged to read the proxy statement and
prospectuses and other relevant materials when they become available because    
they will contain important information about Mittal Steel Company and ISG and  
the proposed transaction. Investors and security holders may obtain a free copy 
of these materials, when they are available, and other documents filed with the 
Securities and Exchange Commission at the SEC's Website at www.sec.gov. Ispat   
International and ISG and their respective executive officers and directors may 
be deemed to be participants in the solicitation of proxies from the ISG        
stockholders with respect to the proposed transaction. Information regarding the
interests of these officers and directors in the proposed transaction will be   
included in the proxy statement and prospectuses.                               

And now I would like to turn the call over to Mr. Wilbur Ross.                  

Wilbur Ross  - International Steel Group Inc. - Chairman                        

I would like to start by introducing to you the team sitting with me today. In  
addition to myself--                                                            

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

Operator, we have some background noise--                                       

Wilbur Ross  - International Steel Group Inc. - Chairman                        

Operator, can you take the background noise, all of them should be in a         
listen-only mode, thank you.                                                    

Operator                                                                        

Yes, sir. That was wrong.                                                     

Wilbur Ross  - International Steel Group Inc. - Chairman                        

There is all types of background noise, you should put everyone else in a       
listen-only mode.                                                               

Operator                                                                        

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Yes sir, I'll will mute that line.                                              

Wilbur Ross  - International Steel Group Inc. - Chairman                        

Thank you, and good morning everyone. I would like to start by introducing you  
to the team sitting here with me today. In addition to myself, as you know, I am
Chairman of ISG and I will become a Board Member of Mittal Steel. In addition,  
Mr. Lakshmi Mittal, who is the CEO of Mittal Steel; Aditya Mittal, who will     
become President, Group Financial Officer, and a Member of the Board; Malay     
Mukherjee, who will become Chief Operating Officer; and Rodney Mott, who will   
become CEO of our combined US operations.                                       

This is a really exciting day for me and I think for all of you because the     
transaction we are now announcing is going to change the entire world's steel   
map. This will create the largest and more importantly in many, many markets    
around the world, the lowest cost producer, and will create an entity that has  
investment-grade debt characteristics to it. It will also be an entity that is  
quite vertically integrated and is relatively self sufficient both in iron ore  
pellets, coke, and then integrated all the way on through very, very high       
quality finishing capability. I think that this will provoke a lot of change in 
the rest of the steel industry, every bit as much as ISG's original formation   
provoked a lot of change in the American steel industry. And I'd now like to    
turn it over to Mr. Lakshmi Mittal, who will describe to you our purpose today. 

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                       

Thank you Wilbur and good morning to all of you who are participating in this   
call. I welcome, heartily, the participants on behalf of ISG group and also on  
behalf -- who are participating on behalf of ISG. It's a great day today and I'm
also very excited about the transactions, which we are going to discuss in this 
morning's call. This morning, the purpose of this call is to announce two       
transactions and the creation of a new global powerhouse in the steel sector.   

First, merging of Ispat International and LNM Holdings to create Mittal Steel.  
Ispat is acquiring LNM for 100 percent stock consideration. Mittal Steel will be
a financially strong unified platform through which to achieve best-in-class    
operating and financial performance. Second, we are announcing the merger of ISG
with Mittal steel, gaining the number one position in the North American        
industry. Mittal Steel is acquiring ISG for a combination of $21 per share in   
cash and a variable number of shares based on an exchange ratio, which floats   
within a collar.                                                                

On a pro forma basis, economic interest in the Mittal Steel will consist of 9   
percent owned by ISG's public shareholders, 3 percent owned by Ispat public     
shareholders and 88 percent owned by the Mittal family. Completion of the LNM   
merger is expected by the end of 2004; completion of ISG acquisition is expected
by the end of Q1 2005. Mittal steel will be the global number one company,      
offering substantial new opportunities both to exploit the knowledge and        
expertise of the two groups and to unlock the significant organic growth        
potential.                                                                      

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The composition of Mittal steel, if you look at this graph on the Website,      
you'll see that Ispat International has 29 percent share, LNM Group has 45      
percent, and ISG has 26 percent. And combined all these, this composition's     
total 9 months pro forma basis has a shipment of 43 million tons. Operating     
earnings of this 43 million tons on a pro forma basis for 9 months is about $4.9
billion of which Ispat contributes 25 percent, ISG contributes 11 percent, and  
LNM Group contributes 64 percent.                                               

We are a global leader, and based on pro forma 2004 estimates, we'll have a     
production of approximately 57 million tons, which clearly puts the group in    
number one position in the steel industry. We'll have a revenue of $31.5        
billion, which also puts the group in number one position. Operating earnings of
6.8 to $7.0 billion, and we believe this is also number one in the steel        
industry. Based on Friday's close, the transaction has a market capitalization  
of $18.5 billion, which we also believe is the highest market capitalization    
among the steel companies in the world. We'll have a net debt of $3.2 billion at
year end, less than half times operating income. It's clearly is an             
investment-grade characteristic. We'll have operations in 14 countries across 4 
continents. We've 165,000 proud employees. In a global ranking, based on market 
capitalization, we will have $18.5 billion, which is the highest among the steel
companies. In shipment, based on pro forma fiscal year 2004, Mittal Steel       
figures of 2004 and for the rest 2003 we will have shipments of 57 million tons.
In North America, on the first half actual pro forma basis, we will have a      
shipment of, in North America, of 13.6 million tons.                            

In operating earnings, first half actual pro forma basis is -- Mittal Steel,    
combined entities of all the 3 companies, has operating earnings of $2.7        
billion. If you look at the product mix of the group, we have out of 43 million 
tons, the shipments for 9 months '04, 26 percent is long and 74 percent is flat.
If you look at the geographic mix of the production of the shipment, we have 47 
percent in North America, which includes Mexico, Canada, and Trinidad, we have  
32 percent in Europe, and 21 percent for the rest of the world. It clearly      
demonstrates geographic diversity of the products.                              

If you look at the group structure, we can define the group in 3 zones. North   
America, which constitutes North America, Europe, and rest of world. North      
America has shipment of - for 9 months - 20 million tons. We are number one     
producer and we have operations in US, Canada, Mexico, and Trinidad. In Europe, 
we have a shipment of 13.5 million tons, we are number two in Europe, number one
in Central Eastern Europe with operations in France, Germany, Poland, Czech     
Republic, Romania, Bosnia, and Macedonia. In rest of world, we have shipments of
about 9.2 million tons. Number one in Africa, leading exporter to China, and    
operations in Kazakhstan, South Africa, and Algeria.                            

Other key operating attributes of the group. In terms of raw material, if we    
look at iron ore, over 40 percent is coming from captive sources and the group  
has large reserves of over 2 billion tons. Similarly on coal, 40 percent is from
captive source and large reserves of over 1.5 billion tons. Coke, the group is  
neutral on its coke needs. Spot sales by some companies offset spot buys in     

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others. Direct reduced iron supplement is a substitute for the scrap; we are    
number one in the world with a total production capacity of 11 million tons.    

We are not only in the steel making business, we also have strong infrastructure
in some of our facilities like deep-water ports. We have the railway facilities,
railcars, and locomotive. We also have very high quality engineering workshops. 
We are clearly -- has a leadership in technology, we have all the 3             
technologies, minimill technology, integrated minimill, and integrateds.        

If you look at our CAGR for last 15 years, it is an average of 19 percent, which
is a phenomenal CAGR if you compare with any other steel company in the world.  
2004 however includes Iscor and Poland -- Iscor, which is a South African       
company, Poland which is -- PHS is Polish company, and pro forma number of ISG. 
By the way, if we continue to follow this CAGR of 19 percent, we will soon be   
producing the world global production. So there is a limit to such kind of a    
CAGR going forward. With this, I will hand it over to Wilbur to give us an      
overview of ISG.                                                                

Wilbur Ross  - International Steel Group Inc. - Chairman                        

I think that you can see already why we are so excited at ISG to be a part of   
this new company and why we are delighted to own over $2 billion worth of stock 
in it. So my friend, this is by far the largest single investment we have made  
in anything.                                                                    

ISG, as many of you know, is the leading North American producer with production
capacity of 20 million tons per year generated from facilities in 8 states      
throughout the Eastern and Central United States with significant production    
flexibility and modern facilities, and as you know, a very competitive cost     
structure consisting of a highly productive culture, pattern setting labor      
agreement, and no legacy costs. In addition, we have had a disciplined financial
strategy and a conservative capital structure.                                  

The transaction summary of the deal with Mittal is as follows -- It is the      
acquisition for cash and stock of all of the outstanding shares of ISG. The     
payment is $21 cash per share plus shares in Mittal, based on a floating        
exchange ratio between 0.4793 shares of Mittal per ISG share and 0.6087, subject
to a collar with a floor of $34.50. Total pro forma shares outstanding will be  
704 million of which the Mittal family will own 88 percent based on Friday's    
closing Ispat stock price. The total transaction value we estimate to be $4.5   
billion including the assumption of ISG's debt based on Friday's closing Ispat  
stock price. The public bonds of ISG will remain outstanding to a noncallable,  
nonfloatable and they will stay outstanding; they will be unaffected by this.   
The competitive advantages of the new enterprise are the following -- Financial 
strength, unmatched scale and scope, very high margins, very low cost           
production, geographic and product diversity, integrated business model, a      
strong financial profile which uniquely positions us for future growth and best 
of all, a proven management team.                                               

Now I will turn it over to Aditya Mittal to give you an overview at this time.  

Aditya Mittal  - Mittal Steel Company - President & CFO                         

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Good morning and good afternoon to everybody on the line. My name is Aditya     
Mittal. I am going to start with an overview of Ispat International. Most of you
should be familiar with this Company. This is the surviving entity of the 3-way 
merger and will be renamed as Mittal Steel Company towards the end of the year. 

Today, this Company has a production capacity of over 18 million tons before    
this transaction. It has steel making operations in 6 countries, primarily in   
North America and Western Europe. The countries are listed on the slides in     
front of you. The 9-month shipment is approximately 12.4 million tons, revenues 
are $6.3 billion, and operating earning of $1.4 billion for 9 months. The       
Company also issued earnings this morning and had an EPS of $3.91 for the third 
quarter 2004. This Company is also traded on The New York Stock Exchange and    
Amsterdam Euronext under the ticker symbol IST.                                 

Let me now begin with an overview of LNM. LNM is the private company which is   
being acquired by Ispat International for 525 million shares. I am going to try 
and spend some more time on LNM as it is an entity, which is relatively unknown 
due to its private nature. LNM is among the top 5 steel producers in the world  
on its own. It has a production capacity of over 32 million tons with a         
diversified portfolio of flat and long products. It has steel making operations 
in 7 emerging market countries. The countries are listed on the presentation as 
well, but primarily they are Poland, The Czech Republic, and Romania - we       
consider that as being part of Europe - Kazakhstan, and then in Africa, South   
Africa, and Algeria. We also list Bosnia, but that transaction is still pending 
and is expected to close in the next 3 weeks.                                   

If we look at the overall steel making capacity, we are roughly equally divided 
between Europe and rest of the world, which is 50 percent Europe and the other  
50 percent in the rest of the world. The other key feature of the LNM Group is  
its vertical integration through the ownership of coal and iron ore mines, coke 
making facilities, engineering workshops, and various infrastructure facilities.
Early on in the presentation, our Chairman discussed the actual mining capacity 
of iron ore, coal as well as its reserves, and I'm will not get into the details
at this point in time. The company has 9 month 2004 shipments of approximately  
19 million tons, revenues of $9.9 billion, and operating earnings of $3.2       
billion. As part of the release, which discussed the merger agreements this     
morning, we've attached LNM Holdings financials as well.                        

Let's get to the transaction. The overall 3-way merger is a 2-step process. The 
first step in this transaction is the acquisition by Ispat International N.V. of
LNM Holdings N.V. The acquisition is a share transaction and the consideration  
is 525 million shares issued to the Mittal family. These shares are issued in   
the same proportion as existing Mittal family ownership of Ispat International. 
And it will result in an additional issuance of approximately 385 million Class 
B shares and 140 million Class A shares.                                        

Let me try and put this acquisition in perspective. Based on Friday's close, the
market capitalization -- based on market capitalization of Ispat International  
N.V. on Friday, the aggregate consideration for LNM Holdings is 13.3 billion. As
I mentioned earlier, the operating                                              

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income is $3.2 billion, and third quarter operating income itself is about $1.25
billion. Let's annualize these numbers, add depreciation, and we'll get an      
EBITDA number of $5 billion. The Company post a dividend payment of $2 billion  
and will have a net cash position at the end of December 31, 2004. Therefore if 
you are looking at an EBITDA multiple, based on Friday's close, the multiple is 
pretty attractive. Therefore we believe this acquisition is in the interest of  
Ispat International shareholders and it's a pleasure for Mittal to find on that.
Furthermore, since this is a share deal, all the assets and liabilities of LNM  
are being assumed. The total pro forma outstanding shares post this acquisition 
is 643 million shares, and the company will be renamed Mittal Steel.            

Let me walk you through the next slide, which talks about the pro forma combined
Ispat/LNM companies, which is really the pro forma combined of Mittal Steel. Let
me add, these are pro forma numbers, they are unaudited numbers, and therefore  
should be treated as estimates. The shipment numbers are evident from the       
slides, but let me just repeat it. 10.8 million tons for the third quarter      
leading to a number of 31.4 million tons for 9 months, and expected shipment    
number of 42 million tons for this full year.                                   

The important take-aways from the slide are the following. Let us first focus on
the superior operating performance of LNM. As we can see, LNM Holdings has a    
significant operating margin of 31.8 percent. That margin is among the best in  
the global steel industry, and it's reflective of its low-cost steel making base
and its vertical integration. Furthermore, as I mentioned earlier, LNM operates 
in primarily high-growth economies, and therefore has future potential of       
growing its revenue line and to certain degree maintaining its operating margin.

Let us also talk about the gearing levels of the combined entity. As you can see
on a pro forma combined basis, the company has a net debt position of about $500
million. This will grow to about $1 billion towards the end of the year post the
dividend. This demonstrates that the pro forma group of Mittal Steel has        
substantial debt raising capability, has a low-grade (ph) balance sheet, and as 
mentioned earlier, investment-grade specific.                                   

The last point I wanted to mention on this Slide, which is not evident, is the  
low tax environment, which LNM Holdings operates in. The 5 principle facilities,
let's take Poland and the Czech Republic, they are in low tax environments of 19
and 25 percent respectively. In Algeria, there is a tax holiday for about 10    
years. In Romania, there is a tax holiday for 5 years. In Kazakhstan, there is  
an investment tax agreement till 2009. And there is significant annuals at our  
subsidiary in South Africa called Saldanha. Therefore the low-tax environment   
leads to high point of earnings going forward.                                  

Let us now focus on the pro forma combined including ISG. Clearly, these        
financials are outstanding; that speak for themselves vis-a-vis the global steel
industry. The pro forma revenues for 9 months is $22.5 billion and operating    
income of about $5 billion for the 9 months. If we add back the depreciation, we
are looking at $5.5 billion EBITDA for 9 months. If you focus on the third      
quarter itself, which has been a record quarter for LNM, Ispat, and ISG, we can 
see that the shipment level of about 15 million tons, revenues of $9 billion and
operating income of $2.2                                                        

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billion. If you were to add depreciation and get to EBITDA, we'll get $2.4      
billion of EBITDA for the combined entity with a net debt of $573 million as of 
Q3 2004. We expect this number, as I mentioned earlier, to increase marginally  
to about 700 to $800 million towards the end of the year.                       

Let me now talk about 2004 full-year outlook. In the fourth quarter, we see     
selling prices increasing marginally. We see quantity is declining due to       
seasonal factors. We see some increases in raw material costs and an increase in
working capital. We expect for 2004 to have shipments of approximately 57       
million tons. Revenue expected to be $31.5 billion and operating earnings       
between 6.8 to $7 billion representing an operating margin of over 20 percent.  
The earnings per share is expected to be in the range of $7.20 to $7.40.        
Depreciation, as I mentioned earlier, is approximately $800 million for the     
year. The pro forma net debt calculation is done based on adding the            
consideration for the purchase of ISG and we get to a pro forma net debt        
position of $3.2 billion. All these pro forma numbers assuming the maximum      
issuance of shares and the figures do not include any purchase accounting       
adjustments.                                                                    

Therefore, to conclude, the outlook is positive, generally flat based on third  
quarter results, and on a combined basis, the balance sheet of Mittal Steel     
Company along with ISG is very strong, investment-grade statistic, and has      
high-growth potential going forward. With that I hand it back to our Chairman   
for concluding remarks. Thank you.                                              

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

Thank you, Adit. Now, it's time that we open for questions and answers, and     
Christy, please go ahead.                                                       

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QUESTION AND ANSWER                                                             

Operator                                                                        

(OPERATOR INSTRUCTIONS). Wayne Cooperman, Cobalt Capital.                       

Wayne Cooperman  - Cobalt Capital Management - Analyst                          

Actually I was just dialing in to tell you that there is lot of noise on the    
line, but you took care of that, thanks. But Congratulations on a great deal.   

Operator                                                                        

(OPERATOR INSTRUCTIONS) Wayne Atwell, Morgan Stanley.                           

Wayne Atwell  - Morgan Stanley - Analyst                                        

Good morning and congratulations on a very accretive deal. Could you discuss    
synergies between the Inland and the ISG assets. My understanding is that first 
and probably the most exciting area of synergies would be the 2 mills in        
Chicago, but could you explain cost cutting and such between these entities?    

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

Rodney?                                                                         

Rodney Mott  - International Steel Group Inc. - President & CEO                 

We are looking forward to merging the operations as much as we can there in the 
Indiana area. The first stop there though is to push through with our new labor 
agreement into the Inland facilities. That should increase the productivity in  
that plant. Also it will allow us to go through with some job reductions through
attrition and of course through the combination of the corporate staffs; we     
should pick up some other synergies there. Additionally, we'll be looking at    
moving iron around between the plants in order to optimize production on each of
the facilities. Of course, we'll also go through, again, minimize our CapEx     
expenditures by looking forward to combining the operations, not duplicating    
CapEx, and use the strength of the Ispat Group in order to do the raw material  
buying for those plants. Overall, there should be numerous synergies. We have   
yet to put together the teams to analyze those. That should be happening over   
the next couple of weeks.                                                       

Aditya Mittal  - Mittal Steel Company - President & CFO                         

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Wayne, could I just add one point that Rodney touched on which is significant?  
As part of this transaction, we have also signed a letter of agreement with the 
USWA, which Rodney covered, in terms of trying to achieve the productivity norms
at ISG facilities -- at our facility in Chicago at Ispat Inland.                

Wayne Atwell  - Morgan Stanley - Analyst                                        

Would you be interested in going upstream in buying some coal assets or are you 
going to concentrate on steel?                                                  

Aditya Mittal  - Mittal Steel Company - President & CFO                         

In which market?                                                                

Wayne Atwell  - Morgan Stanley - Analyst                                        

In any market.                                                                  

Aditya Mittal  - Mittal Steel Company - President & CFO                         

The idea of the group is always to increase its vertical integration and        
therefore to the extent that opportunities are available in low-cost areas to   
increase our vertical integrations in terms iron ore or coal, metallurgical     
coal, we will look in to that, definitely.                                      

Wayne Atwell  - Morgan Stanley - Analyst                                        

Well, with your assets in so many different countries, I guess, you'll have a   
lot of options in terms of where you can buy coal, you can move coke around.    

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

We always look at this, Wayne, very carefully. And we have coal operations in 2 
countries, and as Aditya said, we will continue to look at opportunities for    
further increasing our coal mining capacity and as you might have known from    
ISG, they are also going to start mining, one of the coal mining operations very
soon and they are -- Rodney, would you like to say about your coal mining       
operations?                                                                     

Wayne Atwell  - Morgan Stanley - Analyst                                        

Yes, again, within the ISG Group, we have just this summer opened up our first  
of our coal reserves in Western Pennsylvania, and we have also filed the permits
and made the leased agreement with an operator for additional 2 million tons of 
annualized capacity that we will be bringing on late next year. So, again, the  
Company's strategies are being vertically integrated, match up very well.       

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Operator                                                                        

Aldo Mazzaferro, Goldman Sachs.                                                 

Aldo Mazzaferro  - Goldman Sachs - Analyst                                      

Hi, Good morning it is Aldo Mazzaferro with Goldman. On the -- 2 questions, I   
just wonder if you have any plans on a globally, and in North America could     
possibly reduce capacity in a site or any kind of reduction of capacity on a    
synergy basis. And then my second question is regarding the shares that would be
outstanding owned by the Mittal family. I was wondering if you have any lock-up 
agreements on those shares or whether there would be any comments from the      
management as to whether those shares would be freely for sale immediately.     

Rodney Mott  - International Steel Group Inc. - President & CEO                 

Aldo, I am -- it is Rodney again. I would like to speak for the North American  
operations. Again, we sum up to a lot of synergies between the companies. And   
every time we are talking about them we are looking at opportunities to increase
the capacity and the utilization in North America. There is no other facilities 
that are being targeted, they are all for reduction or a shutdown. We are really
excited about the ability to grow, now that we have a strong partner working    
with us. And to the question about the shares, Aditya?                          

Aditya Mittal  - Mittal Steel Company - President & CFO                         

No, let me add something more to what Rodney said about the capacity. As we have
said during our presentation that we have a lot of opportunities on the newly   
acquired companies, like in Poland and Romania. And we see that opportunities to
grow in both countries. Of course, the markets also in those countries are also 
growing.                                                                        

Rodney Mott  - International Steel Group Inc. - President & CEO                 

In terms of the shares, there are no lock-up agreements or standstill           
agreements, either at ISG side or at Ispat International or LNM Holdings side.  
Clearly, the family, if it were to sell a large number of shares, would do      
through registered offerings, something like that. At this point in time, there 
are no such plans, as we believe. The Company has good potentials in terms of   
its growth, objectives, and realizing the benefits of the consolidation in the  
US steel industry.                                                              

In terms of the ownership percentages, as I mentioned earlier, Ispat            
International is issuing 525 million shares to LNM Holdings. This is in addition
to Mittal family's existing ownership within Ispat International and then they  
will be issuing approximately between 48.5 to 61.5 million shares to ISG        
depending on the collar mechanism. Therefore in the presentation, we used about 
700 million shares -- 704 million shares as the approximate number for the total
number of shares outstanding post to transaction.                               

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Aldo Mazzaferro  - Goldman Sachs - Analyst                                      

Great. Could you tell us of that 704 million, what would be the trading close,  
likely I guess there would be million plus, whatever Ispat has at this time.    

Aditya Mittal  - Mittal Steel Company - President & CFO                         

It would be about 10, 10.5 percent.                                             

Aldo Mazzaferro  - Goldman Sachs - Analyst                                      

10 to 10.5 percent.                                                             

Aditya Mittal  - Mittal Steel Company - President & CFO                         

I mean it's 10 to 11.5 percent really in terms of the range.                    

Aldo Mazzaferro  - Goldman Sachs - Analyst                                      

Right, depending on what you issue.                                             

Aditya Mittal  - Mittal Steel Company - President & CFO                         

And depending on where the stock pay is, obviously the total will be dependant  
on that. Based on Friday's close it about $2 billion.                           

Operator                                                                        

Cavis Venever, Lehman Brothers.                                                 

Cavis Vanever Analyst                                                           

Good morning and my congratulations first of all. Could you shed some light on  
how you arrived at the evaluation for the intermediate step of Mittal merging   
with Ispat?                                                                     

Aditya Mittal  - Mittal Steel Company - President & CFO                         

Sure. As I mentioned in my presentation, we in terms of the operating           
performance for 2004, the forecast states EBITDA of around $5.4, $5.5 billion   
for LNM Holdings. If you look at the aggregate consideration based on Friday    
close of $13.2 billion, we are looking at a relatively low EBITDA to enterprise 
those multiples. And then also mentioning that the pro forma net cash number is 
$100 million. In terms of the process that was followed, there was an           
independent committee or a special committee with independent directors which   
reviewed various evaluation                                                     

425 14th Page of 29 TOC 1st Previous Next ↓Bottom Just 14th
metrics. I am not pretty aware of the evaluation metrics that they utilized as  
they were independent, and the Mittal family was excused from all such meetings 
either at the board level or at the committee level and the committee was       
advised by Credit Suisse First Boston as well as [Inaudible] in arriving at the 
consideration value.                                                            

Operator                                                                        

Bruce Klein, CSFB.                                                              

Bruce Klein  - CSFB - Analyst                                                   

Congratulations. If you can help us just -- I think you said the net debt was, I
think, pro forma for the 3-way was 3.2. If you can help us, maybe break it out  
-- the bigger pieces of that, how much was cash, that will be helpful. And      
secondly, just on a -- I didn't know -- on the -- Inland has the                
nine-and-three-quarter percent [Inaudible] . Can I get to know if there is any  
flexibility to exercise the equity clawback or that's not going to be applicable
here?                                                                           

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

Okay. Let's take your first question first. In terms of the net debt numbers,   
the -- I'm going to try and break it up by entity, and then give you the        
consolidated number. As I mentioned earlier, LNM Holdings towards the end of the
-- post dividend declaration will have a net debt number of negative 100 or net 
cash position of $100 million. We expect Ispat International to have net debt   
number of about a billion dollars. And therefore the combined Mittal Steel      
Company towards the end of the year will have pro forma net debt number for     
about $900 million. We then look at ISG's balance sheet, and ISG will have about
200 to $250 million of net debt towards the end of the year. My definition of   
net debt is cash and cash equivalents that ables to bank some portion of ST debt
and long-term debt, which will results in about 1.1 to $1.2 billion in terms of 
net debt for the combined entities. We then add the purchase consideration,     
which is 50 percent cash and based on a $42 price we get to $2.1 billion. That  
takes the total net debt number of all the 3 entities to $3.2 billion on a pro  
forma basis. As I mentioned earlier, these are estimates.                       

Bruce Klein  - CSFB - Analyst                                                   

Okay, and on the second question?                                               

Aditya Mittal  - Mittal Steel Company - President & CFO                         

The second question in terms of the Inland financing, there are no call         
provisions in the term debt, but there is some equity clawback provision,       
ultimately there is -- it's market based.                                       

Bruce Klein  - CSFB - Analyst                                                   

Will this transaction trigger that call? Would you be able to use the call?     

425 15th Page of 29 TOC 1st Previous Next ↓Bottom Just 15th
Aditya Mittal  - Mittal Steel Company - President & CFO                         

No, it would not trigger that call.                                             

Bruce Klein  - CSFB - Analyst                                                   

It will not trigger?                                                            

Aditya Mittal  - Mittal Steel Company - President & CFO                         

Yes.                                                                            

Bruce Klein  - CSFB - Analyst                                                   

And then lastly, just on the -- with regards to USWA -- you guys spoke a little 
bit quickly in your initial comments, but what are -- what are the thoughts     
there with regards to specifically, Inland and then are there any legacy        
liabilities at LNM Holdings prior to this transaction?                          

Rodney Mott  - International Steel Group Inc. - President & CEO                 

We have been in a -- this is Rodney again. We've been in discussions with the   
steel workers for the last week or so, regarding this transaction. They are very
comfortable with the transaction, all the way through their organization. We've 
also met with the executive team, they are from the Inland local and again they 
understand the need to get more aligned with the ISG productivity model. At the 
same time, through this group, we are recognizing the workers at Inland and the 
need they are continuing with some of the legacy costs. The pensions will be    
kept in place, the retiree benefits will be kept in place, and really going     
forward that would get them in line with the ISG model and the benefit packages 
of ISG.                                                                         

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

The existing employees will not be adversely affected.                          

Aditya Mittal  - Mittal Steel Company - President & CFO                         

If I could address your question on deferred employee benefit. As a group, we   
have this philosophy of not having legacy liabilities and that's why we were    
attracted to the ISG model, which is relatively free of legacy liabilities. We  
see the same thing at LNM Holdings, just based on the balance sheet numbers     
year-end -- not year-end, third quarter, we're looking at deferred employee     
benefits of $97 million.                                                        

Bruce Klein  - CSFB - Analyst                                                   

425 16th Page of 29 TOC 1st Previous Next ↓Bottom Just 16th
That's specifically LNM?                                                        

Aditya Mittal  - Mittal Steel Company - President & CFO                         

LNM Holdings?                                                                   

Bruce Klein  - CSFB - Analyst                                                   

Yes.                                                                            

Aditya Mittal  - Mittal Steel Company - President & CFO                         

And therefore clearly, the level of deferred employee benefits at LMN Holdings  
is very minimal and there are no plans which are ongoing. These are adopted     
plans based on them being in existence when you acquired. Clearly, at Ispat     
Inland, we still have the deferred employee benefit obligation for the          
[Inaudible] and the pension. And we will work in terms of the labor -- this     
letter of agreement with the union to see what we can do with those liabilities.

Bruce Klein  - CSFB - Analyst                                                   

Okay, and lastly on the rating agencies, you said, you guys met or got any      
weaker -- you mentioned a couple of times, investment grade type metrics. Have  
you anything -- any thoughts from where they are coming out?                    

Aditya Mittal  - Mittal Steel Company - President & CFO                         

We have just informed the rating agencies this morning of the transaction. We   
expect that when they review our financials and the growth prospects of the     
combined entities, looking at the credit statistics, they will move forward to  
review their ratings and provide us with what we think that the Company         
deserves.                                                                       

Operator                                                                        

Julien Onillion, HSBC Securities.                                               

Julien Onillion  - HSBC Securities - Analyst                                    

I've got 4 questions. First question is concerning the US Steel activities.     
Today's steel market is extremely strong in the US, it is going down a little,  
but still remaining extremely strong. If tomorrow, we have a major collapse of  
the market or downturn, how you will react to that in the US? And my question   
behind that because with the new group, you have a lot of possibilities, I was  
thinking about Mexicana. Are you thinking that in the future or long-term you   
could sell directly from Mexico slabs to the US within the group? Is it         
something you are thinking about? Second question, still in the US concerning   
now your new market position. First question, do you                            

425 17th Page of 29 TOC 1st Previous Next ↓Bottom Just 17th
believe you'll have problem with the regulators because of your new market      
position in the US, you think the deal will go on without any problems? And do  
you think you have still some space to make small acquisition in the US or do   
you think now you are too big, I would say to have any merger/acquisition in the
US? Third question is concerning Europe. You spoke about a little synergy you   
could develop in the US. In East Europe and West Europe, with Ispat and LNM     
Group, do you think there is any synergies? I know Germany is far from Poland,  
but do you think that there is something synergy you can also do in Europe in   
terms of organization, and could you quantify that if it's possible? And final  
question I would say, which is more a strategy question, is concerning China.   
You -- I mean is it now the leading market in the world, it's a growing market  
also. I know that LNM had some talks -- you had some talk with Bahi Iron and    
Steel, you are also sending a lot in China's from Kazakhstan. But do you think  
with the new size of the plant -- you new size of the group tomorrow, you will  
have a more aggressive strategy in China, and that there is possibility for you 
to have a real big industrial position in China in a long term? Thank you.      

Aditya Mittal  - Mittal Steel Company - President & CFO                         

Rodney?                                                                         

Rodney Mott  - International Steel Group Inc. - President & CEO                 

That's a lot of questions there to answer in a hurry. I'll go through the first 
-- I'll do the first couple of ones related to the United States. Certainly in  
the United States, we'll have a very large market share. We do recognize that   
our market does cycle some but it's much similar to what we've done within ISG. 
We'll go through as a combined group, identify a way to flex as with the        
marketplace. We'll flex the operations. And certainly having more facilities, in
this case it'll be up to 12 blast furnaces, it'll be much easier for us to      
schedule our outages to try to match up with the market cycles, or to identify  
which is the higher cost facility and reduce those first when the market goes   
slow. We'll also be working with the Steelworkers Union on a way to reassign the
workers during those times when the market is slow, where we may pick people    
from one area put them to another so that our employees will have their         
security, while we are still adjusting to the marketplace. The second part of   
the question regarding the slabs in Mexico. It would be our intent to use those 
slabs where we can to increase our capacity. We wouldn't be using those in any  
place to displace our own steel making, but rather use that to gain in the      
market share. We do see some possible synergy there. It is exciting to think    
that we could increase the utilization where we have the additional hot mill    
capacity throughout our organization. But at this time, again, that will be     
coming through our studies over the next few weeks.                             

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

Regarding synergies in the Central and Eastern Europe, perhaps you recall that  
all the LNM Holdings, operations and business was managed by Ispat              
International. A lot of exercise has been done for synergies, capturing those   
synergies. And though as I mentioned that we still opportunities to grow in     
Central and Eastern Europe. As far as China is concerned, we have               

425 18th Page of 29 TOC 1st Previous Next ↓Bottom Just 18th
already announced a project in China for the downstream facilities, and we      
normally do not comment on our acquisition activities. But as a group, I        
definitely believe that as a global leader in the steel industry we must have   
our footprints in China.                                                        

Aditya Mittal  - Mittal Steel Company - President & CFO                         

The last comment on the regulators, we do not expect to see any difficulty, I   
think Wilbur can add to this point in terms of his experience of [Inaudible]    
there exist in the US.                                                          

Wilbur Ross  - International Steel Group Inc. - Chairman                        

Yes, we have not so far, in any of our acquisitions, gotten a request for       
further information and we are optimistic that we would get very prompt         
treatment here. We believe the concentration ratios are such that there should  
not be any substance to problem here and I'm told that we also don't expect any 
with the EU.                                                                    

Operator                                                                        

Brett Levy, Jefferies & Company.                                                

Brett Levy  - Jefferies & Company, Inc. - Analyst                               

Hi guys, congratulations. Let's see, first up, based on the way the earnings    
power seems to be going for all your entities, it would seem that especially if 
the ISG transaction closes in February of next year that the pro forma number   
could be lower on the debt side. I guess, I was wondering as you guys look at   
this transaction, where does all the excess cash go between now and February 1? 

Aditya Mittal  - Mittal Steel Company - President & CFO                         

Well some of that excess cash will be used to finance the transaction though    
ideally we would not be taking on additional debt facilities to finance this    
transaction. That's in terms of the sources of some of this cash. As a business 
philosophy, as you have seen LNM Holdings balance sheet, we have been very      
focused on reducing the total leverage as we believe, to be the leader in the   
steel industry, we have to have a lowly geared balance sheet. We see the same   
thing at ISG and now due to the result of this combination of all the 3         
companies on a combined basis the whole Company will have a lowly geared balance
sheet. We think that is the model for the steel industry going forward and we   
are committed to that model and 9therefore we've got to pair down debt further  
and perhaps build up some cash for further acquisitions.                        

Brett Levy  - Jefferies & Company, Inc. - Analyst                               

425 19th Page of 29 TOC 1st Previous Next ↓Bottom Just 19th
In terms of some other subsidiary debt and specifically the Ispat Inland debt   
will that be recourse to any entity beyond that all the way up to Mittal Steel  
or is that strictly going to be at the guarantor level of Ispat Inland?         

Aditya Mittal  - Mittal Steel Company - President & CFO                         

The Ispat Inland debt, we are talking of the main bond financing out there that 
is guaranteed by the parent, which will now be renamed as Mittal Steel Company. 
So this will have a guarantee of the combined entity.                           

Brett Levy  - Jefferies & Company, Inc. - Analyst                               

And the last one relates to sort of the landscape of automotive and contract    
negotiations at this point, can you guys talk, it would be the question         
generally asked of both Ispat Inland and of ISG, how are those negotiations     
going -- sort of there has been talk around of sort of a 20 to 25 percent       
increase and obviously that we are getting close to the finish line on those and
then there is also some sort of variable cost elements and also talk about the  
whether the trend is towards more 1-year contracts. Just generally if can give  
some color on the contract discussions thus far.                                

Rodney Mott  - International Steel Group Inc. - President & CEO                 

Yes, certainly if we go through this type of transaction and this is something  
that we have to be very careful talking about and really we don't have the      
opportunity yet to talk about the different negotiations within the Company and 
I think you really ought to refer back to what you've heard from the Inland     
presentations previously or from ISG separately on anything regarding the market
place.                                                                          

Brett Levy  - Jefferies & Company, Inc. - Analyst                               

Okay, thanks guys and congrats again.                                           

Operator                                                                        

Anthony Rizzuto, Bear Stearns.                                                  

Anthony Rizzuto  - Bear Stearns - Analyst                                       

Got some follow-up questions here. First of all on the regulatory front, by my  
calculations you have approximately 40 percent of the US flat rolled market and 
I believe US Steel would have another 25 percent. I am concerned that 65 percent
of the US market by 2 players is going to send up yellow flag and I just would  
like to explore that a little more in terms how far gotten with regulators? And 
second question, to help us frame global synergies -- certainly I understand    
it's on a very preliminary basis -- but if you can help us better understand    
what kind of synergies and cost reduction potential there is for the group here,
in this combination?                                                            

425 20th Page of 29 TOC 1st Previous Next ↓Bottom Just 20th
Wilbur Ross  - International Steel Group Inc. - Chairman                        

On the regulatory aspect there have obviously been no discussions yet with      
regulators, we'll been filing the Hart-Scott-Rodino relatively shortly but the  
definition of market is a lot more precise than just the broad brush of flat    
rolled sheets. And when you analyze the individual sub markets, we feel         
comfortable that there are no sub centered (ph) problems.                       

Anthony Rizzuto  - Bear Stearns - Analyst                                       

And the second question about synergies, if --                                  

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

On the Synergies, Rodney has already described the process, which we are going  
to follow and I can only say that we are going to start assessing the synergies 
in the next couple of months and we will inform. But as a global group I think  
there are a lot of synergies, which will come to the group as a whole arising   
out of our knowledge management program, arising out of our global experience,  
in terms of our purchasing power, in terms of our marketing knowledge, in terms 
our technological experience. So definitely the group as a whole will be        
definitely benefited by this transaction.                                       

Anthony Rizzuto  - Bear Stearns - Analyst                                       

It's not uncommon for similar mergers in other industries that we've seen in the
metals and mining, the total synergies equating to the levels of maybe 3 to 5   
percent of revenues, would this be fair to look at in order of magnitude with   
this combined entity?                                                           

Aditya Mittal  - Mittal Steel Company - President & CFO                         

I think you should wait for the synergies number, when it is ready we will come 
back to you.                                                                    

Anthony Rizzuto  - Bear Stearns - Analyst                                       

Thank you very much.                                                            

Operator                                                                        

Charles Bradford, Bradford Soleil & Research.                                   

Charles Bradford  - Bradford Soleil & Research - Analyst                        

Could you define the timing of this transaction, when we can expect the various 
documents and so on?                                                            

425 21st Page of 29 TOC 1st Previous Next ↓Bottom Just 21st
Aditya Mittal  - Mittal Steel Company - President & CFO                         

Yes, sure. Let us try and divide the transaction in two. Let us just focus on   
the first transaction. The first transaction is Ispat International acquiring   
LNM Holdings. That transaction is expected to close by December end this year.  
The controlling shareholder of both the entities, which is the Mittal family has
already given its voting agreement that is we vote in favor of this transaction.
Therefore, its primarily [Inaudible] for the final requirements, which would    
take place but the transactions should close by December 31, '05. The other     
transaction is subject to the closing of this transaction. Therefore, the ISG   
combination, the merger between Ispat and LNM is a condition precedent. Moving  
forward, we expect to receive registry of clearance and other regulatory        
clearances during the same time frame and therefore we'd expect to close the ISG
transaction within the first quarter of 2005 as well. And in that transaction as
well, the family has agreed to vote affirmative in the Mittal Steel Board       
general meeting which will occur approving that transaction.                    

Charles Bradford  - Bradford Soleil & Research - Analyst                        

Do you need any approval for the existing non-Mittal family ISG shareholders?   

Aditya Mittal  - Mittal Steel Company - President & CFO                         

We need approval for the minority shareholders. We don't need any approvals as  
such, but we would -- they have the right to vote at the annual general meeting.

Wilbur Ross  - International Steel Group Inc. - Chairman                        

You meant Ispat, not ISG because ISG will have the shareholder meeting, and     
we're quite confident that that will not be controversial.                      

Operator                                                                        

Michael Gambardella, JP Morgan.                                                 

Michael Gambardella  - JP Morgan - Analyst                                      

Congratulations on the deal. Have a couple of questions. In terms of the raw    
material position, when you look at the 3 independent groups today, LNM, IST and
ISG, are any of them net sellers of raw materials?                              

Aditya Mittal  - Mittal Steel Company - President & CFO                         

425 22nd Page of 29 TOC 1st Previous Next ↓Bottom Just 22nd
You have one more question.                                                     

Michael Gambardella  - JP Morgan - Analyst                                      

When you look at the 3 groups that you have today that you'll be combining on   
these 2 transactions, are any of the groups independently net sellers of raw    
materials?                                                                      

Aditya Mittal  - Mittal Steel Company - President & CFO                         

Yes, if you look at the LNM, it is a net seller in coke, metallurgical coke.    

Michael Gambardella  - JP Morgan - Analyst                                      

How much?                                                                       

Aditya Mittal  - Mittal Steel Company - President & CFO                         

It is a net seller of 2 million tons of metallurgical coke, which they've been  
supplying to some of the local producers as well as within the group. Apart from
this, we are basically consuming our own production.                            

Michael Gambardella  - JP Morgan - Analyst                                      

So, would any of that 2 million tons of coke be diverted to any of the new      
companies that are joining Mittal Steel?                                        

Aditya Mittal  - Mittal Steel Company - President & CFO                         

Yes, last year we did supply to Ispat Inland, this year we supplied some        
material to Ispat Inland in Chicago and hopefully, we will also supply some     
materials to ISG next June.                                                     

Michael Gambardella  - JP Morgan - Analyst                                      

But in terms of the overall picture, the raw material position of the 3         
companies really doesn't change that much on this transaction, is that correct? 

Rodney Mott  - International Steel Group Inc. - President & CEO                 

I want to clarify what I think Lakshmi was saying, is that, they have a net     
sales that goes to about 2 million tons and ISG is a net buyer that goes to     
about 2 million tons as we said in the presentation. We get this off to a       
neutral position. According to the [Inaudible] direct shipments, there is sales 
out of one area's stock buy into another part of that. We'll lease them out to  
-- again a synergy that we will find, we'll be having the availability to raw   
material within the group.                                                      

425 23rd Page of 29 TOC 1st Previous Next ↓Bottom Just 23rd
Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                       

But what it will mean on a net-to-net basis is that, we have relatively little  
exposure to the stock market, which has been so troublesome in the past year.   
And for the rest of the supplies, we have already had a long-term contract with 
the raw material suppliers CVRD and MBR and other iron ore producers.           

Aditya Mittal  - Mittal Steel Company - President & CFO                         

Michael I think what's happening is that, LNM Holdings have a very high degree  
of vertical integration. And as you combine the 2 companies, the vertical       
integration grows up to 40 percent in iron ore and metallurgical coke. But that 
is very significant considering the fact that we expect to ship about 60 to 63  
million tons of steel and we're the largest steel company in terms of production
capacity. The message really is that, as such a large company, we have 40       
percent vertical integration for iron ore, about 40 percent vertical integration
for met coke and we're generally coke-neutral, which is a very strong position, 
vis-a-vis [Inaudible] what appears--                                            

Michael Gambardella  - JP Morgan - Analyst                                      

Okay and the second question is in regards to the 2 classes of common stock, was
there any consideration into -- collapsing it into one class, and what are the  
differences in the voting rate between Class A and Class B. And when you look at
the Mittal family, what is the economic interest versus the voting interest in  
the combined entity at the end of the day?                                      

Aditya Mittal  - Mittal Steel Company - President & CFO                         

As you know Michael, the transaction structure is at Ispat International that   
has acquired LNM and subsequent to that acquiring ISG. Therefore, there is no   
corporate change at Ispat International and therefore, we do not collapse the   
voting structure and the voting structure is continuing as it was. In terms of  
the economic interest, it is largely around 88.5 percent to approximately 90    
percent. Again, these numbers are pro forma and depend on the number of issuance
of the shares to ISG shareholders and the voting difference, Class A has a      
single vote and Class B has 10 votes and you can do the math in terms of that-- 

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

From the ISG point of view, we did a very careful study, and we don't find any  
perceptible difference particularly where there is a controlling block. No      
perceptible difference between 1-vote shares and 10-vote shares in terms of     
trading value. So, we do not feel that there is anything adverse from ISG point 
of view to taking the 1 vote per share and that also has the added benefit.     
Those are the shares that have the most market liquidity and the most slope.    

Michael Gambardella  - JP Morgan - Analyst                                      

425 24th Page of 29 TOC 1st Previous Next ↓Bottom Just 24th
Okay. Last question. Are all 3 entities -- are they on the same accounting      
standards in terms of GAAP numbers?                                             

Aditya Mittal  - Mittal Steel Company - President & CFO                         

Yes, they all are US GAAP numbers. Clearly as a European Company, we will have  
to file IFRS starting 2005. We will have 2 accounting reports. The only         
difference in terms of purchase accounting, which we should all be aware of, is 
that there is LIFO at ISG and before the different inventory method and clearly,
there would be some purchase accounting adjustments. So, those issues will be   
there. And all the numbers that are there are before any purchase accounting    
adjustments.                                                                    

Michael Gambardella  - JP Morgan - Analyst                                      

Okay. Last question. What are you going to do for an encore after this?         

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

What would you suggest--                                                        

Michael Gambardella  - JP Morgan - Analyst                                      

I am sure I will be surprised in the future as well.                            

Operator                                                                        

(Chicagura  Snowbec)  (ph) , CSFB.                                              

Chicagura Snowbec  - CSFB - Analyst                                             

My question is related to total shipments in topline, the 2004 outlook that you 
are giving, how much of this actually is the China?                             

Aditya Mittal  - Mittal Steel Company - President & CFO                         

Going forward, we will not be breaking out shipments to specific countries. I   
think there was a slide which talked about how much is Europe, how much is --   
just I can repeat that for you, the shipments in terms of North America is about
47 percent, Europe is 31 percent, and the rest of the world is 22 percent, rest 
of the world includes our operations in Africa as well as Asia.                 

Chicagura Snowbec  - CSFB - Analyst                                             

Okay, and Asia would be a big portion of it?                                    

425 25th Page of 29 TOC 1st Previous Next ↓Bottom Just 25th
Aditya Mittal  - Mittal Steel Company - President & CFO                         

Well, by Asia, we are including Kazakhstan. And clearly Kazakhstan is turning a 
significant portion of its tonnage into both the western part of China as well  
as eastern part of China.                                                       

Chicagura Snowbec  - CSFB - Analyst                                             

And in terms of Europe, 31 percent -- I assume it includes the Central and      
Eastern Europe, how much of this 31 percent is to the emerging Europe?          

Aditya Mittal  - Mittal Steel Company - President & CFO                         

Well, we would then have to exclude Romania, because Poland and the Czech       
Republic are part of the EU now. The EU versus the non-EU, the shipment number  
is about 4.5 million tons, and therefore, about 30 percent of that number is    
non-EU.                                                                         

Chicagura Snowbec  - CSFB - Analyst                                             

Is there any -- I just have a quick question on the North American part, maybe  
the question is answered already, I apologize if that's the case. For ISG, we   
talked about -- you talked about it in the past -- your strategy of getting to  
80 percent contract business, 75 to 80 percent for '05, is there going to be any
change following this merger to the contract strategy?                          

Aditya Mittal  - Mittal Steel Company - President & CFO                         

Could I just, before you start, make a small clarification. I think I made a    
small mistake because I was giving 9 months' versus 3 months' number. That      
should be the shipments of Sidex, out of this Europe is probably 7.5 to 8       
percent, not the 10 or 11 percent number that I gave.                           

Chicagura Snowbec  - CSFB - Analyst                                             

7.5 to 8 percent -- 8 million tons, you mean?                                   

Aditya Mittal  - Mittal Steel Company - President & CFO                         

No. The other way to read out the numbers, I will just start again. North       
America 47 percent. Let's say 23 to 24 percent EU; 8 percent Europe non-EU; 7, 8
percent in Europe non-EU and 22 percent rest of the world. Okay, and your       
question regarding the contract business, again we can't talk about our plans   
going forward, it is in the marketing area. But as you have just heard during   
our ISG presentation, again we do believe that in North America there is a need 
to go after substantially large part of your business being contract business.  
We are being very successful growing our share on a contract basis and would be 
expecting to go somewhere over 75 percent contract business within ISG.         

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Chicagura Snowbec  - CSFB - Analyst                                             

Last question is related to integration issues maybe for '05. One of the        
requirements this year, obviously, from an economic standpoint is the           
Sarbanes-Oxley 404. And you made some progress on the ISG side, how do this     
issue be tackled within 2005 with the integrated entity. In other words Ispat   
Inland also had made some progress or is there is any issue that we should be   
aware of?                                                                       

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

Well, the first point is that as a form filer, our requirement is for the       
year-end 2005. So that's -- I think that captures everything. We are -- as Ispat
International and as LNM making significant progress in terms of SOX 404 and we 
expect to take from ISG. Now, I'll ask Rodney to elaborate on that.             

Wilbur Ross  - International Steel Group Inc. - Chairman                        

You might notice that ISG actually reported it's earnings several days earlier  
than it informed.                                                               

Chicagura Snowbec  - CSFB - Analyst                                             

Yes, I did.                                                                     

Wilbur Ross  - International Steel Group Inc. - Chairman                        

And you can quite correctly interpret, it is meaning that they were able to pull
everything together even more rapidly either than we had in prior quarters or   
than we had originally anticipated. So we feel we are well on the way to what we
need to do.                                                                     

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

We will take one more question.                                                 

Operator                                                                        

(Dwayne Tennomer, First Capital  Alliance)  (ph) .                              

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

There is just enough time, we will take one more question.                      

Dwayne Tennomer  - First Capital Alliance - Analyst                             

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Congratulations. I was going to get more details on the history of this         
transaction, how did this transaction come together, who approached who and what
have you, and also you may have mentioned this earlier but I -- if so I didn't  
hear. What kind of breakup fee is associated with the transaction?              

Wilbur Ross  - International Steel Group Inc. - Chairman                        

This is Wilbur Ross, I will give you both. The Mittals and I met some several   
weeks ago and we had an immediate love affair. In that we both felt that we each
had more income with the other than either of us did with any of the other steel
companies. In that case, there is a great deal of confidence that the corporate 
culture would not be anything very shocking in terms of requiring change. So    
that was the start of it and then the obvious synergies between Inland and ISG  
and the obvious importance of their very strong raw material supply relative to 
some of the issues we have had. And then finally they and we are equally        
obsessed with the overall financial strength of the Company and are quite       
determined to achieve investment grading. Think that answers both questions. As 
to the breakup, see as you know, it is well established practice in the US to   
have a 3 percent breakup fee. That's what we have here, it's roughly a $125     
million.                                                                        

Dwayne Tennomer  - First Capital Alliance - Analyst                             

Okay, one last thing, when will Mittal shares begin to -- when they will be     
issued?                                                                         

Wilbur Ross  - International Steel Group Inc. - Chairman                        

Well, it is not Mittal's shares being issued, it is Ispat, which is already     
trading. We simply changed its name to Mittal upon the completion of the merger.

Dwayne Tennomer  - First Capital Alliance - Analyst                             

I see. Okay.                                                                    

Operator                                                                        

Ladies and gentlemen, that concludes today's conference call. I will now the    
turn the call back over to Lakshmi Mittal for any closing remarks. Please       
proceed, sir.                                                                   

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

Thank you very much and I thank all of you who have participated in this call.  
As I said in the beginning of this call that all of us within our Company, in   
our group, the management and employees, all of us are very excited about this  
transaction. Perhaps to know that this is a very unique transaction, it's a very
global transaction and this is one of the largest transaction steel industry has
ever seen. And it creates a lot of benefit to the whole group in terms of       
synergies, in                                                                   

425 28th Page of 29 TOC 1st Previous Next ↓Bottom Just 28th
terms of its leadership, and I believe that it is going to create               
a very large, appreciable shareholder value. I will handover to Wilbur for his  
final comments.                                                                 

Wilbur Ross  - International Steel Group Inc. - Chairman                        

We are sorry we had to spring such a complicated thing on you so quickly. But   
you'll notice from the preannouncement trading, there was no leakage whatsoever 
and we are very, very happy, but that was the case with such a transaction      
involving so many entities all around the world. We think that this is the way  
that the future powerful companies, vertically integrated, and very strong      
financially, that is the way to the future in the steel industry. And we will be
fascinated to see what kind of competitive response that elicits from rest of   
the industry.                                                                   

Lakshmi Mittal  - Mittal Steel Company - Chairman & CEO                         

Finally, I will like to welcome all the shareholders and investors of ISG to    
Mittal Steel Company, and I look forward to talking to you very soon. Thank you.
Bye, bye, have a good day.                                                      

Operator                                                                        

Thank you for your participation in today's conference. This concludes the      
presentation. You may now disconnect.                                           

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Dates Referenced Herein and Documents Incorporated by Reference

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	12/31/04	8		20-F
Filed on:	10/26/04			425
	10/25/04	1		425, 6-K
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Filing Submission 0000947871-04-002422 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

Mittal Steel Co N.V. – ‘425’ on 10/26/04 re: Mittal Steel Co N.V.

On: Tuesday, 10/26/04, at 4:59pm ET · Accession #: 947871-4-2422 · File #: 1-14666

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