<SEC-DOCUMENT>0001193125-15-027565.txt : 20150724
<SEC-HEADER>0001193125-15-027565.hdr.sgml : 20150724
<ACCEPTANCE-DATETIME>20150130152153
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001193125-15-027565
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		3
FILED AS OF DATE:		20150130

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Ternium S.A.
		CENTRAL INDEX KEY:			0001342874
		STANDARD INDUSTRIAL CLASSIFICATION:	STEEL WORKS, BLAST FURNACES  ROLLING MILLS (COKE OVENS) [3312]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			N4
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		29 AVENUE DE LA PORTE-NEUVE
		STREET 2:		3RD FLOOR
		CITY:			LUXEMBOURG
		STATE:			N4
		ZIP:			L-2227
		BUSINESS PHONE:		(352) 4661-11-3815

	MAIL ADDRESS:	
		STREET 1:		29 AVENUE DE LA PORTE-NEUVE
		STREET 2:		3RD FLOOR
		CITY:			LUXEMBOURG
		STATE:			N4
		ZIP:			L-2227
</SEC-HEADER>
<DOCUMENT>
<TYPE>CORRESP
<SEQUENCE>1
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<TITLE>Response Letter</TITLE>
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<TD VALIGN="bottom"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">TERNIUM&nbsp;S.A.</P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Soci&eacute;t&eacute;&nbsp;anonyme&nbsp;holding</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Registered
office:</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><FONT STYLE="white-space:nowrap">29,&nbsp;Avenue&nbsp;de&nbsp;la&nbsp;Porte-Neuve</FONT></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">L-2227 Luxembourg</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">R.C.S. Luxembourg B 98 668</P>
<P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman">www.ternium.com</P></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">January 30, 2015
</P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Mr.&nbsp;Terence O&#146;Brien, </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Accounting Branch Chief,
</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporation Finance, </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Securities and Exchange
Commission, </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">100 F Street, N.E., </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, D.C.
20549-4631. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>Re:</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Ternium S.A. File No.&nbsp;1-32734 </B></TD></TR></TABLE>
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<TD WIDTH="13%">&nbsp;</TD>
<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
<TD ALIGN="left" VALIGN="top"><B>December&nbsp;31, 2013 Form 20-F filed April&nbsp;30, 2014 </B></TD></TR></TABLE>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>&nbsp;&nbsp;&nbsp;&nbsp;</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Response dated December&nbsp;17, 2014 </B></TD></TR></TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Dear Mr.&nbsp;O&#146; Brien: </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">Set out below are the responses of Ternium S.A. (&#147;<U>Ternium</U>&#148; or the &#147;<U>Company</U>&#148;), to the comment of the Staff of
the United States Securities and Exchange Commission (the &#147;<U>Staff</U>&#148;) set forth in its letter dated January&nbsp;13, 2015, to Mr.&nbsp;Pablo Brizzio, the Company&#146;s Chief Financial Officer (the &#147;<U>Comment Letter</U>&#148;).
The responses below are keyed to the headings indicated in the Staff&#146;s comments and are designated with the letter &#147;R&#148; below the comment number. The comments themselves are set forth in boldface type. </P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>1.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Value in use differs from fair value in that value in use considers the inclusion of owner specific synergies and economies of scale that will not be passed on when an asset is sold externally. With reference to the
guidance in IAS 36 paragraph 53A, please identify and quantify differences, if any, between the value transacted on October&nbsp;2, 2014 and your value in use. </B></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">R:</TD>
<TD ALIGN="left" VALIGN="top">In response to the Staff&#146;s comment, the Company confirms to the Staff that, in assessing the recoverable amount of its investment in Usiminas at September&nbsp;30, 2014, it calculated its value in use without
considering any owner specific synergies or economies of scale. </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">The Company believes the price of BRL12 per share that
Ternium agreed to pay to Caixa de Previd&ecirc;ncia dos Funcion&aacute;rios do Banco do Brasil (&#147;PREVI&#148;) for 51.4&nbsp;million ordinary shares of Usiminas was lower than the intrinsic value of such shares at that time. Ternium and
PREVI&#146;s different views regarding the price Ternium was willing to pay for, and PREVI was willing to sell at, Usiminas&#146; shares, could be attributable to the very significant differences that exist in each company&#146;s approach towards an
investment in Usiminas, and not necessarily to the factors mentioned on IAS 36 paragraph 53A. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">As a member of Usiminas&#146; control group,
Ternium&#146;s value in use calculation considers the long-term potential and prospects of Usiminas, which, even though declining since Ternium made its initial investment in January 2012, continue to result in a value significantly higher than
BRL12 per share. </P>

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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">By contrast, PREVI is a pension fund manager and, as such, a financial investor. While
Ternium is not in a position to confirm PREVI&#146;s drivers or considerations in connection with the sale of the shares, the Company notes that PREVI&#146;s press release announcing the sale of its stake to Ternium (a copy of which, together with a
free translation into English, is attached as Annex I for the Staff&#146;s convenience) shows that PREVI&#146;s approach to valuation is significantly different to Ternium&#146;s. </P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>2.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Provide us with any contemporaneous documentation (e.g., board presentations) that supports how management and the board arrived at and approved the final price.</B> </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">R:</TD>
<TD ALIGN="left" VALIGN="top">In response to the Staff&#146;s request, the Company has submitted under separate cover a copy of the presentation provided by management to the Company&#146;s board of directors on September&nbsp;26, 2014.
</TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>3.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>As noted in paragraph 33(a) of IAS 36, greater weight shall be given to external evidence when measuring value in use. In this regard, tell us how you complied with that requirement by having considered the
October&nbsp;2, 2014 transaction price. We continue to have concerns, especially in light of this recent market transaction, that the carrying value of the Usiminas investment is recoverable. </B></TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">R:</TD>
<TD ALIGN="left" VALIGN="top">The Company advises the Staff that it believes to have complied with paragraph 33(a) of IAS 36 when measuring value in use. The Company also confirms that it used adequate external evidence to support the assumptions it
made for the main drivers of its Usiminas value in use calculation, including iron ore and steel prices, foreign exchange and interest rates, Brazilian GDP and steel consumption in the Brazilian market. In this respect, we refer to the data and
materials provided, as well as comments made, in our September&nbsp;12, 2014 and December&nbsp;17, 2014 response letters. </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">As
indicated in our response to comment 1 in the Comment Letter, Ternium believes the October&nbsp;2, 2014 transaction price does not reflect the value of Usiminas shares considering the long-term potential and prospects of this company; rather, it is
lower than such value. </P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>4.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>Please confirm to us whether PREVI was represented on Usiminas&#146; board of directors. In this regard, it appears from Usiminas&#146; website that one board member, Alo&iacute;sio Mac&aacute;rio Ferreira de Sousa,
is also a board member of PREVI. </B></TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">R:</TD>
<TD ALIGN="left" VALIGN="top">The Company confirms to the Staff that at the time Ternium entered into its share purchase transaction with PREVI, PREVI was represented on Usiminas&#146; board of directors by Mr.&nbsp;Wanderley Rezende de Souza.
Mr.&nbsp;Rezende (as well as his alternate, Mr.&nbsp;Hudson de Azevedo) were elected at the 2014 shareholders meeting by PREVI through cumulative voting. Both Mr.&nbsp;Rezende and Mr.&nbsp;Azevedo resigned from the Usiminas board of directors
concurrently with the closing of the PREVI transaction. </TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">The Company advises that Mr.&nbsp;Alo&iacute;sio Mac&aacute;rio
Ferreira de Sousa had been appointed by PREVI to the Usiminas board of directors at the 2012 and 2013 shareholders meetings; however, as indicated above, at the 2014 shareholders meeting PREVI used its votes to elect other candidates.
Mr.&nbsp;Mac&aacute;rio was nonetheless elected at the 2014 shareholders meeting as an alternate director, this time with the votes of other minority shareholders. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">2 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:8%; font-size:10pt; font-family:Times New Roman">According to PREVI&#146;s website
(http://www.previ.com.br/a-previ/estrutura-organizacional/), none of Messrs. Rezende, Azevedo or Mac&aacute;rio is a member of any of PREVI&#146;s governing bodies. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">* * * * </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company
acknowledges that it is responsible for the adequacy and accuracy of the disclosure in its filings. In addition, the Company acknowledges that the Staff&#146;s comments or changes to the Company&#146;s disclosure in response to the Staff&#146;s
comments do not foreclose the Commission from taking any action with respect to the Company&#146;s filings and that the Company may not assert the Staff&#146;s comments as a defense in any proceeding initiated by the Commission or any person under
the federal securities laws of the United States. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">If you have any questions relating to this letter, please feel free to call Robert S.
Risoleo of Sullivan&nbsp;&amp; Cromwell LLP at (202)&nbsp;956-7510. He may also be reached by facsimile at (202)&nbsp;956-6974 and by <FONT STYLE="white-space:nowrap">e-mail</FONT> at risoleor@sullcrom.com. </P>
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<TD VALIGN="top">Very truly yours,</TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Pablo Brizzio</P></TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Pablo Brizzio</P> <P STYLE="margin-top:0pt; margin-bottom:1pt; font-size:10pt; font-family:Times New Roman">Chief Financial
Officer</P></TD></TR>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left">cc:</TD>
<TD ALIGN="left" VALIGN="top">Al Pavot </TD></TR></TABLE> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">(Securities and Exchange Commission) </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">Mervyn Martins </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">(PricewaterhouseCoopers) </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">Cristian J. P. Mitrani </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">(Mitrani,
Caballero, Ojam &amp; Ruiz Moreno) </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">Robert S. Risoleo </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">(Sullivan &amp; Cromwell LLP) </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">3 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">Annex I </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center"><B>PREVI PRESS RELEASE </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">02/10/2014 </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>PREVI vende participa&ccedil;&atilde;o na Usiminas </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>Desinvestimento do Plano 1 no ativo segue os preceitos de busca por liquidez, devido &agrave; maturidade do plano, aliada &agrave; boa oportunidade de
neg&oacute;cio. </B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">A PREVI e o grupo &iacute;talo-argentino Techint-Ternium assinaram hoje, 2/10, contrato de compra e venda da
participa&ccedil;&atilde;o acion&aacute;ria da Entidade na sider&uacute;rgica Usiminas, empresa na qual a PREVI &eacute; acionista desde 1991. O valor da transa&ccedil;&atilde;o &eacute; de R$ 616,7 milh&otilde;es pela participa&ccedil;&atilde;o de
5,07% no capital total da Companhia, o que gerou para o Plano 1 da PREVI um ganho de 82% sobre o valor das a&ccedil;&otilde;es da empresa negociadas em Bolsa. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Vislumbrando um cen&aacute;rio menos promissor para a ind&uacute;stria sider&uacute;rgica, a aliena&ccedil;&atilde;o da participa&ccedil;&atilde;o na Usiminas
vinha sendo discutida com a Techint-Ternium desde janeiro desse ano. O neg&oacute;cio foi fechado em fun&ccedil;&atilde;o de uma oferta financeira amplamente vantajosa para a PREVI. Considerando os valores de compra e venda da Companhia, bem como os
dividendos recebidos pela PREVI ao longo dos anos, todos atualizados pelo atuarial e pela Selic, o ativo apresentou uma rentabilidade superior &agrave; meta atuarial do per&iacute;odo. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Desinvestimentos como esse da PREVI na Usiminas s&atilde;o um bom exemplo de como os recursos do Plano 1 vem sendo administrados. A Entidade est&aacute;
constantemente estudando oportunidades no mercado, tanto para investimentos como para desinvestimentos. Quando uma oferta favor&aacute;vel no aspecto financeiro une-se &agrave; crescente necessidade de aumento da liquidez para pagamento dos
benef&iacute;cios atuais e futuros dos participantes do Plano 1, por ser um plano maduro e que paga R$ 9 bilh&otilde;es em benef&iacute;cios por ano, a PREVI avalia tecnicamente e, caso se configure de fato em um bom neg&oacute;cio, pode vir a
concretizar a transa&ccedil;&atilde;o. Esse &eacute; um movimento que, ao longo das pr&oacute;ximas d&eacute;cadas, dever&aacute; se tornar cada vez mais comum na carteira de participa&ccedil;&otilde;es do Plano 1. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">4 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">[Free translation] </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">10/02/2014 </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>PREVI sells its interest in Usiminas </B></P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>This divestiture in Plan&nbsp;1 is consistent with a search for liquidity, due to the plan&#146;s maturity, together with a favorable business opportunity.
</B></P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Today, PREVI and the Italian-Argentine group Techint-Ternium entered into a sale and purchase agreement for PREVI&#146;s interest in Usiminas, a
company in which PREVI has been a shareholder since 1991. The transaction amount was R$616.7 million for 5.07% of Usiminas&#146; total share capital, which resulted for Plan&nbsp;1 in profits of 82% over the trading price of the shares in the Stock
Exchange. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Foreseeing a less promising future for the steel industry, the sale of this interest in Usiminas has been under discussion with Techint-Ternium
since January&nbsp;2014. The deal was reached upon receiving an offer significantly favorable to PREVI. Considering the shares&#146; purchase and sale prices, as well as the dividends received by PREVI over the years, as updated by actuarial review
and by Selic, the profitability of this asset was higher to the actuarial goal for the period. </P> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Divestitures by PREVI as this one in Usiminas are a good
example on how the assets of Plan&nbsp;1 are being managed. PREVI is constantly analyzing opportunities in the market, both for investments and for divestitures. When the growing need for increased liquidity for the payment of the current and future
benefits to Plan&nbsp;1&#146;s participants, as Plan&nbsp;1 is a mature plan that pays R$9 billion per year in benefits, meets a financially favorable offer, PREVI technically analyzes such opportunity and, in case that it represents a good deal for
PREVI, it pursues the transaction. This is a strategy that, over the coming decades, will become more and more frequent in Plan&nbsp;1&#146;s portfolio. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">5 </P>

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