Argentina Government Wins Small Victory In Legal Battle With Siderar

Argentina's pension-fund agency, Anses, has received a favorable court ruling in its battle to obtain a greater voice on the board of steel company Siderar SA (ERAR.BA, SDDFF), according to the Labor Ministry.

A judge has issued an injunction preventing Siderar from acting on the resolutions, including the payment of 1.5 billion pesos ($367 million) in dividends, approved at the company's annual general shareholders' meeting held on April 15, the ministry said in a statement.

Anses has asked the courts to void the meeting.

Representatives of Ternium SA (TX), Siderar's parent company, weren't immediately available for comment.

Industrial-conglomerate Techint, which controls Ternium and steel-tube maker Tenaris SA (TS), and the administration of President Cristina Fernandez have periodically sparred over her economic policies aimed at fostering domestic employment and production.

In February, the government invoked a 1970s supply law to temporarily force steelmakers to roll back price increases. Last year, the country's powerful truckers union and key ally of the Fernandez administration blocked access to several of Siderar's factories in a dispute over benefits.

The latest row stems from a presidential decree published earlier this month that allows Anses to exercise its full voting rights in the 42 companies in which it owns shares.

Anses became the country's largest institutional investor after the government nationalized the private-pension system at the peak of the 2008-2009 global financial crisis.

Prior to the decree, the agency's voting rights were capped at 5% regardless of its share ownership. Anses ownership exceeds 5% in 32 firms, and in 15 companies it has stakes of more than 20%.

At Siderar's annual shareholders' meeting, Anses voted against the dividend payment and other resolutions proposed by the company's board, while Siderar opposed an attempt by the agency to exercise its 26% stake to place at least one representative on the board of directors.

Securities regulator CNV subsequently declared the meeting void on the grounds that it was plagued by "irregularity and inefficacy." The meeting has been suspended until May 11.

Ternium has said it plans to challenge the CNV resolution and the presidential decree in the courts.

Shares of Siderar traded on the Buenos Aires Stock Exchange fell 2.4% to close at ARS31.15 on Tuesday. Even so, the shares have risen 6.7% since the decree was published April 13, while the benchmark Merval stock index has fallen nearly 1% during the same period.

Critics have questioned the president's decision to abolish the voting cap by decree rather than seeking approval from congress. The timing of the decree just six months before general elections has also raised eyebrows.

The country's business elite have also reacted with consternation to what many see as an unwanted intrusion by the government in their affairs as they face demands for hefty wage increases from pro-government unions.

The powerful industrial trade group, UIA, has urged the administration to reconsider the move, though at the same time hinted it is open to a negotiated settlement.

Economy Minister Amado Boudou and Anses President Diego Bossio have said the government's intentions are benign and that the pension agency only stands to benefit if its investments are profitable.

-By Ken Parks, Dow Jones Newswires; 54-11-4103-6740, [e-mail]