Aços Villares S.A. and Böhler-Uddeholm AG signed an Investment Agreement

Brazilian steel company Aços Villares S.A. and Austrian steel company Böhler-Uddeholm AG signed an Investment Agreement on December 23, 2003 providing for an investment by Böhler-Uddeholm in the capital of Villares? wholly-owned subsidiary Villares Metals S.A. as a result of which Böhler-Uddeholm would acquire up to 99.99% of Villares Metals.

The cost of the transaction was approximately R$ 217 million.

The deal closed on March 19, 2004, when Bohler Uddeholm do Brasil S.A., a subsidiary of Böhler-Uddeholm AG, acquired shares representing 99.9% of the total and voting capital of Villares Metals.

Villares Metals is a manufacturer of tool steel, valve steel, stainless steel, high speed steel and other high alloy steels. Böhler-Uddeholm is a manufacturer of special steel products similar to those manufactured by Villares Metals, and is one of the largest manufactures of tool steel in the world. As a result of the transaction, Aços Villares will be able to focus its activities in the segments of engineering steel and rolling mill rolls, in which it has technology and competitiveness in an international level, and will be released from the obligation to make investments that would be necessary for Villares Metals to maintain its competitiveness. The consolidated indebtedness of Aços Villares will also be substantially reduced as a result of the transaction.

Pinheiro Neto Advogados acted a Brazilian counsel to Aços Villares through partner Henry Sztutman and senior associate Miguel Tornovsky.

Lilla Huck Malheiros Otranto Ribeiro Camargo e Messina Advogados acted as Brazilian counsel to Böhler-Uddeholm through partners Inez do Amaral Sampaio, Mariana Heck and Carol Levy Saposnic.

Eckert & Fries acted as Austrian counsel to Böhler-Uddeholm through partner Vitus Eckert.

Gonzalo Mugica and Deise Martins da Silva were the in-house lawyers of Aços Villares working on the deal.

Sabine Kelmayr was the in-house lawyer of Böhler-Uddeholm working on the transaction.