During 2009, the Group proceed to the following:
The subsidiary company "ALUMINION S.A" (hereinafter called the "Subsidiary") has filed a lawsuit against the Public Power Company (PPC) (hereinafter called the "Supplier") regarding the validity of the termination of the initial electricity supply contract by the latter. In addition, "ALUMINION S.A." disputes the validity of the increase of electricity supply prices enforced by the Supplier in July 2008 by virtue of the relevant Ministerial decree (Ministry of Development) regarding the abolishment of regulated invoices for the high voltage customers and the obligation of the Supplier to negotiate with said customers subject to a ceiling of a 10% increase on the effective up to 30/6/2008 invoice.
More specifically the Subsidiary disputes the electricity pricing from the Supplier in total as it has not resulted from any negotiations, as provided by the Ministerial decree, while ιin effect it is a variation of the already revoked former industrial tariff with a flat 10% increase. Moreover, the position of the Subsidiary is as such:
- it disputed from the very beginning the unilaterally imposed 10% increase, requesting the issuance of a credit note form the Supplier. Following the Supplier's reluctance to issue such an invoice the Subsidiary proceeded with the issuance of such credit note itself.
- it accepted with reservations the rest of the invoiced amount acting in good faith and for a transitional period until the final conclusion of the negotiations that the two parties should have entered into. However, as the reasonable time for the two parties to enter in negotiations had elapsed, the Subsidiary disputes actively the total of the invoice.
Moreover, the Subsidiary and the Supplier, following respective BOD decisions, referred the resolution of the above-mentioned dispute to Arbitration before the President of the Supreme Court of Greece to resolve on the interpretation of the relevant Ministerial Decree. More specifically, whether the 10% increase over the former tariff, has been legally imposed, without prior negotiations of the parties involved, as well as whether the Supplier had the right and/or the obligation to enter into negotiations with the Subsidiary regarding the terms of their power supply contract, especially referring to the pricing mechanism, with the cap of a price equal to the former tariff increased by 10% and without any floor.
In compliance with the contents of the Arbitration Court Ruling issued on 25.02.2010 - between the Greek "Public Power Corporation (PPC) S.A." and "ALUMINIUM S.A."-, the 100% subsidiary "ALUMINIUM S.A." will enter into negotiations with the PPC S.A. under the principles of good faith and commercial values. The aim of the negotiations which commenced on the 23rd March 2010 will be to reach an agreement of the terms under which PPC will supply electricity power to ALUMINIUM S.A. to cover fully or partly the needs of our subsidiary and to settle the transactions between the two parties for the period from 01.07.2008 to the date of the final agreement.
Considering the aforementioned Ministerial decree along with the above Court Ruling, the Management of ALUMINIUM S.A. estimated the maximum contingent liability towards PPC for the period 01.07.2008 - 31.12.2009 and was posted as a provision in the results of the period.
The cumulative difference resulted between the issuance of the invoices by the supplier and the recorded provision for the period 01.07.2008 - 31.12.2009 amounts to 21,3 mil €, of which 8,1 mil € relate to 2008 and 13,2 mil € relate to the period 01.01.- 30.06.2009.
Any contingent liabilities (beyond the provision) or assets that may result from the final decision of the arbitration cannot be reliably assessed at the moment.
On 26 January 2009 the General Assembly of the Shareholders of the subsidiary Sometra S.A. resolved to the temporary suspension of the production activity of the Zinc-Lead production plant in Copsa Mica, Romania, and to drastically reduce the number of personnel. This decision was considered necessary due to the extremely adverse conditions that prevail in the international markets for metals in combination with the lack of raw materials for the production of zinc, after the world's only bulk concentrate mine stopped operating. It is noted that the price of zinc in London's Metal Exchange (LME) registers an all-time record low of only 1,100 USD/ton, down from 4,000 US/ton in early 2008.
MYTILINEOS S.A. contributed its 20% participation in each one of the companies ANEMORAHI S.A., ANEMODRASI S.A. and KATAVATIS S.A. to its 100% subsidiary MOVAL S.A. and the latter acquired respectively the remaining 80%. The recognized goodwill at Group level amounted to €5,76 mil as presented in the table below:
On 14.04.2009 MYTILINEOS HOLDINGS S.A. completed the joint venture agreement with MOTOR OIL (HELLAS) CORINTH REFINERIES S.A. for the joint construction, operation and exploitation of a 400 MW approximately combined cycle, gas turbine power plant within the MOTOR OIL facilities in Ag. Theodori (Corinthia). The agreement was completed with the acquisition by MYTILINEOS Holdings S.A., through its 100% subsidiary "ARGYRITIS GEA S.A.", of a 65% stake in KORINTHOS POWER S.A., which currently holds the licences for the above power plant, through a share capital increase, with MOTOR OIL S.A. retaining a 35% stake in the Company. The increase of the Company's share capital amounted to 59.4 million Euro and was fully subscribed by MYTILINEOS HOLDINGS S.A., through "ARGYRITIS GEA S.A.", on 15.04.2009. The construction of the new combined-cycle gas turbine power plant is undertaken by METKA S.A., a subsidiary of MYTILINEOS HOLDINGS S.A. According to the construction schedule, construction of the plant will be completed in 28 months, i.e. within 2011. The total investment amounts to 285 million Euro. The recognized goodwill at Group level amounted to €20,8 mil.
On 25.6.2009 the contract for the construction of a thermal power plant in Damascus - Syria was signed between the Syrian Arab Republic and the ANSALDO Energia/METKA Consortium, with METKA as Leader. The project concerns engineering, procurement, construction and commissioning of a natural gas fired power plant of 700MW. The participation shares in the project are ANSALDO Energia with 25% and METKA with 75%. ΜΕΤΚΑ, as the Consortium Leader, shall invoice to the client the entire project value on behalf of the Consortium. The contract value amounts to €640,032,609 plus SYP 724,034,823 (around €11,000,000 at the current exchange rate).
On 28.09.2009, the B.o.D of the 100% subsidiary "MOVAL S.A." resolved to the merger with its 100% subsidiaries "ENERGI E2 AIOLIKI S.A." and "ENERGI E2 KARYSTIA S.A.".
On the 30th of October, ΜΕΤΚΑ S.A. and RWE & Turcas Güney Elektrik Uretim A. Ş. have signed an EPC contract for the construction of a natural gas fired combined cycle power plant with a net power output of 775 MW near Denizli, Turkey. METKA's scope represents an amount of approximately € 450 million and the commercial operation of the plant is planned for the end of 2012.
On 31 December 2009, the Extraordinary General Meeting of the shareholders of "ALUMINION S.A." resolved to the recalling of the plan for the de-merger of "ALUMINION S.A." by the merger of its assets and liabilities with the companies "ALUMINION OF GREECE S.A." and "ENDESA HELLAS S.A." Since the de-merger will not be concluded by the 31 December 2009, a time period of more than 24 months will lapse and the financial results of the years 2008 and 2009 will be included in financial year 2010. Consequently, the de-merger will be legally considered cancelled (POL 1080/05.04.94 Directive of the Ministry of Finance). For those reasons, the Board of Directors of "ALUMINION S.A." resolved: a) to recall the 27.6.2008 resolution of the B.o.D of the company concerning the de-merger of the company and b) to recall the 18.9.2008 resolution of the B.o.D of the company concerning the approval of the De-merger Plan of "ALUMINION S.A.".