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Note 32 - Subsequent Events | 12 Months Ended
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Dec. 31, 2018
Statement Line Items [Line Items] |
Disclosure of events after reporting period [text block] |
32 | Subsequent events
Acquisition of Saudi Steel Pipe Company
| a) | Acquisition
On January 21, 2019, Tenaris acquired 47.79% of the shares of Saudi Steel Pipe Company (“SSP”), a welded steel pipes producer listed on the Saudi stock market, for a total amount of SAR529.8 million (approximately $141 million). The amount was paid with Tenaris cash in hand. SSP’s facilities are located in the Eastern Province of the Kingdom of Saudi Arabia and have a manufacturing capacity of 360,000 tons per year. SSP started its operations in 1980 and serves energy industrial and commercial segments, is qualified to supply products with major national oil companies in the region. Upon closing of the acquisition, four Tenaris’s nominees were appointed as new members of the SSP’s board of directors and a senior executive with Tenaris was appointed as managing director and chief executive officer of SSP. The Company has begun consolidating SSP’s balances and results of operations as from January 21, 2019.
| b) | Fair value of net assets acquired
The application of the purchase method requires certain estimates and assumptions specially concerning the determination of the fair values of the acquired intangible assets and property, plant and equipment as well as the liabilities assumed at the date of the acquisition. The fair values determined at the acquisition date are based mainly on discounted cash flows and other valuation techniques. The preliminary allocation of the fair values determined for the assets and liabilities arising from the acquisition is as follows:
Fair value of acquired assets and liabilities: |  | SAR million |  | $ million
Property, Plant and Equipment |  |  | 675 |  |  |  | 180 |
Intangible assets |  |  | 278 |  |  |  | 74 |
Investment in associated |  |  | 77 |  |  |  | 21 |
Working capital |  |  | 168 |  |  |  | 45 |
Cash and Cash Equivalents |  |  | 32 |  |  |  | 8 |
Other Receivables |  |  | 11 |  |  |  | 3 |
Borrowings |  |  | (304 | ) |  |  | (81 | )
Employees end of service benefits |  |  | (59 | ) |  |  | (16 | )
Net assets acquired |  |  | 878 |  |  |  | 234 |
Tenaris acquired 47.79% of total assets and liabilities shown above, approximately $112 million. The preliminary purchase price allocation disclosed above is currently under analysis with the assistance of a third party expert. Following IFRS 3, the Company will continue reviewing the allocation and make any necessary adjustments (mainly over Property, Plant and Equipment, Intangible Assets and Provisions) during the twelve months following the acquisition date.
| 32 | Subsequent events (Cont.)
Agreement to build welded pipe plant in West Siberia On February 5, 2019 Tenaris entered into an agreement with PAO Severstal to build a welded pipe plant to produce OCTG products in the Surgut area, West Siberia, Russian Federation. Tenaris will hold a 49% interest in the company, while PAO Severstal will own the remaining 51%. The commencement of the project is subject to regulatory approvals and other customary conditions. The plant, which is estimated to require an investment of $240 million and a two -year construction period, is planned to have an annual production capacity of 300,000 tons. Techgen refinancing On February 13, 2019, Techgen entered into a $640 million loan agreement with several banks to refinance its obligations under the existing syndicated loan. Techgen’s obligations under the new facility, which is “non-recourse” on the sponsors, will be guaranteed by a Mexican security trust covering Techgen’ shares, assets and accounts as well as Techgen’s affiliates rights under certain contracts. In addition, Techgen’s collection and payment accounts not subject to the trust have been pledged in favor of the lenders under the new loan agreement, and certain direct agreements –customary for these type of transactions– have been entered into with third parties and affiliates, including in connection with the agreements for the sale of energy produced by the project and the agreements for the provision of gas and long-term maintenance services to Techgen. The commercial terms and conditions governing the purchase, by the Company’s Mexican subsidiary Tamsa, of 22% of the energy generated by the project remain unchanged. Under the loan agreement, Techgen is committed to maintain a debt service reserve account covering debt service becoming due during two consecutive quarters; such account is funded by stand-by letters of credit issued for the account of Techgen’s sponsors in proportion to their respective participations in Techgen. Accordingly, the Company and its Swiss subsidiary Tenaris Investments Switzerland AG applied for stand-by letters of credit covering 22% of the debt service coverage ratio, which as of the date hereof amounts to $9.8 million. The proceeds of the new loan, which is expected to be drawn on or about February 26, 2019, will be used to repay all loans outstanding under the existing facility. Upon repayment of such loans, Tenaris’s corporate guarantee thereunder will be automatically released. Annual Dividend Proposal On February 20, 2019 the Company’s Board of Directors proposed, for the approval of the Annual General Shareholders' meeting to be held on May 6, 2019, the payment of an annual dividend of $0.41 per share ( $0.82 per ADS), or approximately $484 million, which includes the interim dividend of $0.13 per share ( $0.26 per ADS) or approximately $153 million, paid on November 21, 2018. If the annual dividend is approved by the shareholders, a dividend of $0.28 per share ( $0.56 per ADS), or approximately $331 million will be paid on May 22, 2019, with an ex-dividend date of May 20, 2019. These Consolidated Financial Statements do not reflect this dividend payable.

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