CSC to Fully Take Over Dragon Steel via Share Swap

Taipei, March 24, 2008 (CENS)--China Steel Corporation (CSC), Taiwan's largest integrated producer of steel products, has resolved to fully buy out Dragon Steel Corporation, formerly the Kuei Yu Steel Corp., making it its wholly owned subsidiary.

CSC said it would swap shares with Dragon: exchanging one of its own for 2.6 Dragon shares. The date for the share swap is to be settled on September 30 this year.

At present, CSC holds 47.99% stake in Dragon, which is capitalized at NT$27.36 billion (US$89.7 million at US$1:NT$30.5). In addition to CSC, Dragon has other shareholders, including Feng Hsin Steel Iron & Steel Co., Hsin Kuang Steel Co., Mega Financial Holdings Co., Gains Investment Corp., C.S. Aluminum Corp., China Steel Security Corp., Info-Champ Systems Corp., China Hi-ment Corp., China Steel Structure Corp., United Steel Engineering & Construction Corp., etc.

To fully take over Dragon, CSC will increase paid-in capital by NT$5.76 billion (US$188.85 million). After completing the share swap with Dragon, CSC will see paid-in capital reach NT$125.958 billion (US$4.12 billion) from present NT$115.3 billion (US$3.78 billion). Recently the company's board of directors met to approve to distribute NT$3.8 (US$0.12) in dividend per share.

C.H. Chang, CSC's VP of finance, noted that the acquisition of Dragon shares is driven by the belief in the merit to consolidate group-wide resources. With the acquisition of Dragon, CSC will be able to cut production costs by consolidating material procurement, production and marketing, distribution channels, and pricing strategy.

Dragon scored NT$1.67 billion (US$54.75 million) in after-tax earnings, or NT$0.61 (US$0.02) in earnings per share, on sales of NT$19.44 billion (US$637.37 million) last year. The company currently is capable of rolling out 300,000 metric tons of steel billets, and 600,000 metric tons of H-beam steel and narrow-span steel plates, per year.

At present, Dragon is building an integrated blast furnace capable of rolling out 2.5 million metric tons of molten iron per year, with its construction to be completed by the end of 2009.

Feng Hsin Steel president M.J. Lin said CSC would be able to enhance its operating strength after taking over Dragon at a time when many world-class steel mills are adopting merger and acquisition.