TERNIUM ARGENTINA S.A. — Interim / Quarterly Report 2000

May 12, 2000

PROSID INVESTMENTS INC.

FINANCIAL STATEMENTS

AT MARCH 31, 2000

PROSID INVESTMENTS INC.

FINANCIAL STATEMENTS

AT MARCH 31, 2000

CONTENTS

Legal information

Financial statements at March 31, 2000

Balance sheet

Statement of income

Statement of changes in shareholders' equity

Notes and exhibit to the financial statements

Report of independent accountants

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PROSID INVESTMENTS INC.

FINANCIAL STATEMENTS for the nine-month period ended March 31, 2000

Registered office: Vanterpool Plaza, 2nd Floor, Wickhams Cay I, Road Town, Tortola, British Virgin Islands

General objects: To engage in any activity that is not prohibited under any law for the time being in force in the British Virgin Islands

Memorandum of Association and Articles of

Association:

Date of incorporation at the Registrar of Companies

of the British Virgin Islands: 30th day of June, 1998

Registration number at the Registrar of Companies of the British Virgin Islands: 284.513

Capital composition: Par value shares of one dollar (US$ 1.00) and one vote each

Class		Subscribed and Paid-in
		US$
Common		152,000,000

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PROSID INVESTMENTS INC.
REGISTRATION NUMBER AT THE REGISTRAR OF COMPANIES: 284.513
BALANCE SHEET at March 31, 2000
ASSETS							SHAREHOLDERS' EQUITY
				US$					US$
NON-CURRENT ASSETS
	Investments (Exhibit A)			70,808,647				As per respective statement	101,926,728
	Other investments
	Loans convertible into shares
	of Consorcio Siderurgia Amazonia Ltd.			31,118,081
Total non-current assets				101,926,728
Total assets				101,926,728			Total Shareholders' equity		101,926,728
The accompanying notes 1 to 5 and the exhibit A are an integral part of these financial statements
The Report of independent accountants is issued as a separate document
								JAVIER O. TIZADO
								PRESIDENT

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PROSID INVESTMENTS INC.
REGISTRATION NUMBER AT THE REGISTRAR OF COMPANIES: 284.513
STATEMENT OF INCOME for the nine-month period ended March 31, 2000
						US$
	Financial and holding results
	- Generated by assets					353,998
	Result from investments in related companies					(26,187,279)
	Net loss for the period					(25,833,281)
The accompanying notes 1 to 5 and the exhibit A are an integral part of these financial statements
The Report of independent accountants is issued as a separate document
						JAVIER O. TIZADO
						PRESIDENT

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PROSID INVESTMENTS INC.
REGISTRATION NUMBER AT THE REGISTRAR OF COMPANIES: 284.513
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY for the nine-month period ended March 31, 2000
					Capital stock		Capital		Unappropriated		Total
	Item								retained		shareholders'
					Shares issued		surplus		earnings		equity
					US$		US$		US$		US$
Balances at June 30, 1999					120,000,000		2,626,393		(52,078,646)		70,547,747
Capital increase (Note 4)					32,000,000		25,212,262				57,212,262
Loss for the period as per income statement									(25,833,281)		(25,833,281)
Balances at March 31, 2000					152,000,000		27,838,655		(77,911,927)		101,926,728
The accompanying notes 1 to 5 and the exhibit A are an integral part of these financial statements
The Report of independent accountants is issued as a separate document
									JAVIER O. TIZADO
									PRESIDENT

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PROSID INVESTMENTS INC.

REGISTRATION NUMBER AT THE REGISTRAR OF COMPANIES: 284.513

NOTES TO THE FINANCIAL STATEMENTS at March 31, 2000

NOTE 1 – ACTIVITY

Prosid Investments Inc. was registered under the International Business Companies Act of the British Virgin Islands on June 30, 1998. The purpose of the Company is to make financial investments of any nature and to perform any other activity permitted by the laws of the British Virgin Islands.

NOTE 2 – ACCOUNTING STANDARDS APPLIED

These financial statements have been prepared in accordance with international accounting standards solely for use as basis for the valuation by the equity method of accounting of the parent company’s participation in the capital stock of Prosid Investments Inc. The most important accounting standards applied in the preparation of the financial statements at March 31, 2000 are:

• Presentation of accounting information: the financial statements are shown in United States dollars.
• Investments : the participation in Consorcio Siderurgia Amazonia Ltd. (Amazonia) has been valued by the equity method of accounting on the basis of the financial statements of Amazonia at December 31, 1999 adjusted by the effect of the changes to equity and results as explained in Exhibit A. In addition, the accounting standards adopted by Amazonia and its subsidiary Siderúrgica del Orinoco C.A. (Sidor) have been unified with the accounting criteria applied by Prosid Investments Inc.
• Other investments: other investments are valued at their nominal value plus financial results accrued through period-end.

NOTE 3 – TRANSFER OF SHARES OF CONSORCIO SIDERURGIA AMAZONIA LTD.

On November 11, 1998 the procedures were completed for the transfer by Siderar S.A.I.C. of the 105,000,000 shares of Amazonia to the Company for a value of US$ 122,626,393, equivalent to the equity value of the shares contributed. On November 13, 1998, the Board of Directors proceeded to increase the capital stock, applying US$ 120,000,000 to the payment of 120,000,000 shares with a par value of US$ 1 each and the balance of US$ 2,626,393 to the capital surplus account. All of the shares in Amazonia are pledged in guarantee of the bank loan obtained by the latter to acquire its participation in Sidor.

NOTE 4 – CAPITAL INCREASE – CONTRIBUTIONS TO AMAZONIA

To fulfill the commitments arising from the liability restructuring agreements of Sidor and Amazonia (see Note 5), Siderar S.A.I.C. made a contribution in Prosid amounting to US$ 57,212,262 through the transfer of the following receivables:

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PROSID INVESTMENTS INC.

REGISTRATION NUMBER AT THE REGISTRAR OF COMPANIES: 284.513

NOTES TO THE FINANCIAL STATEMENTS at March 31, 2000

NOTE 4 – CAPITAL INCREASE – CONTRIBUTIONS TO AMAZONIA (Contd.)

	US$
Financial receivables from Sidor	22,805,124 (*)
Receivables from Amazonia	5,628,344 (**)
Disbursements and interest for the quarter January-March	28,778,794
Total	57,212,262

(*) US$ 22,420,590 at December 31, 1999

(**) US$ 5,527,929 at December 31, 1999.

On February 18, 2000, the capital stock of Prosid was increased by US$ 32,000,000, charging the difference between this amount and the mentioned contribution to the capital surplus account. In addition, on March 3, 2000, Prosid made contributions in Amazonia amounting to US$ 56,156,707 in the form of a combination of capital contribution amounting to US$ 25,392,624 and loans convertible into shares for US$ 30,764,083.

Considering the amounts capitalized at March 31, 2000, the change in the investment in the capital stock of Amazonia and the reduction by the latter in the number of outstanding shares, at the date of these financial statements the participation of Prosid in Amazonia totaled 29,831,335 shares, representing 19.76% of the capital stock. Assuming that the contributions made in Amazonia in the form of convertible loans will be fully capitalized in two years by the contributing partners, the participation would reach 21.15%.

NOTE 5 – RESTRUCTURING OF LIABILITIES IN AMAZONIA AND SIDOR

Due to the negative conditions prevailing in the international steel market, the profound recession of the Venezuelan economy, the worsening of the international financial market conditions, the appreciation of the Bolivar compared to the U.S. dollar and other adverse factors, Amazonia and Sidor have incurred substantial losses and technical non-compliance with loans and delays in certain payments related to the mentioned loans.

Sidor continues to adopt measures to face existing adverse conditions and the impact of conditions already overcome. At the same time Amazonia and Sidor initiated negotiations to restructure their liabilities.

In February 2000, the abovementioned negotiations were concluded; the matters affecting Prosid mainly including:

• resources committed by Sidor’s shareholders amounting to US$ 300,000,000, US$ 210,000,000 of which correspond to Amazonia in its capacity of holder of 70% of the shares in Sidor and US$ 90,000,000 to the Fondo de Inversiones de Venezuela (F.I.V. Venezuelan Investment Fund) and to companies controlled by C.V.G. US$ 210,000,000 were contributed to Amazonia by its shareholders, in the form of capital contributions and loans convertible into shares.

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PROSID INVESTMENTS INC.

REGISTRATION NUMBER AT THE REGISTRAR OF COMPANIES: 284.513

NOTES TO THE FINANCIAL STATEMENTS at March 31, 2000

NOTE 5 – RESTRUCTURING OF LIABILITIES IN AMAZONIA AND SIDOR (Contd.)

. of the total of US$ 210,000,000 received by Amazonia from its shareholders, US$ 70,000,000 were appropriated to the subscription of shares in Sidor and US$ 140,000,000 to the exchange of Amazonia’s bank debt for Sidor’s subordinated debt. The bank debt originally obtained by

Amazonia for the acquisition of shares in Sidor has therefore been reduced to US$ 252,554,332, and was refinanced under the agreements reached.

. of the contribution of US$ 90,000,000 corresponding to F.I.V. and companies controlled by C.V.G., US$ 60,000,000 are implemented in the form of refinancing of past due debt and US$ 30,000,000 as a capital contribution.

• the conversion of US$ 11,026,000 of debt in Amazonia with its shareholders into a loan convertible into non-voting stock. The participation of the partners was established based on the debt held by Amazonia, US$ 5,628,344 corresponding to Siderar (transferred to Prosid – see note 4).
• the commitment by the partners of Amazonia, except Sivensa, for the advance purchase, in 2007, of US$ 25,000,000 corresponding to Amazonia’s debt with the financial institutions participating in the restructuring, Siderar being the guarantor of US$ 6,000,000.

The Report of independent accountants is issued as a separate document.

JAVIER O. TIZADO

PRESIDENT

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PROSID INVESTMENTS INC.								Exhibit A
REGISTRATION NUMBER AT THE REGISTRAR OF COMPANIES: 284.513
INVESTMENTS - Securities issued in series and investments in other companies
		03.31.00
Denomination			Par		Percentage	Restated	Proportional	Amount
and type of	Issuer	Class	value	Amount	participation	cost	equity	recorded
shares					in capital stock	value	value
						US$	US$	US$
Non-current investments
Related companies
Shares	Consorcio Siderurgia
	Amazonia Ltd.	Ordinary, one vote each	1.0000	105,000,000	17.5000	122,626,393	51,659,445	51,659,445
				(1)
Others
Capital increase (2)						25,392,624	25,392,624	25,392,624
Consorcio Siderurgia Amazonia Ltd. valuation adjustment (3)							(6,243,422)	(6,243,422)
						148,019,017	70,808,647	70,808,647

1. On December 20 Amazonia voted to reduce the number of shares in circulation from 600 million to 100 million, pending approval by the Cayman Island

authorities.

1. As a result of the amounts capitalized, at March 31, 2000 the shareholding of Prosid Investment Inc. in Amazonia represend 19.76% of the capital stock.
2. The criterion of the Company has been to calculate the value of its investment in Amazonia on the basis of the financial statements of the latter with a lag

of three months. Nevertheless, for a better reflection of the economic reality of these financial statements, the equity and results of the Company have been

adjusted by the estimated effect of the results of Amazonia for the period January 1 to March 31, 2000, and the mentioned change in shareholding (2).

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PROSID INVESTMENTS INC.									Exhibit A
REGISTRATION NUMBER AT THE REGISTRAR OF COMPANIES: 284.513
INVESTMENTS - Securities issued in series and investments in other companies (Contd.)
		Information about the issuer
Denomination
and type of	Issuer	Principal activity			Date	Period	Capital	Results	Shareholders'
shares							stock		equity
							US$	US$	US$
Non-current investments
Related companies
Shares	Consorcio Siderurgia	Holding of long-term investments in			12.31.99	12 months	600,000,000	(231,490,882)	295,196,830
	Amazonia Ltd.	Venezuelan steel companies					(1)
(1) On December 20 Amazonia voted to reduce the number of shares in circulation from 600 million to 100 million, pending approval by the Cayman Island authorities.
						JAVIER O. TIZADO
						PRESIDENT

INDEPENDENT PUBLIC ACCOUNTANT’S REPORT ON LIMITED REVIEW

April 25, 2000

To the President and Directors of

Prosid Investments Inc.

1. We have performed a limited review of the balance sheet of Prosid Investments Inc. at March 31, 2000 and of the related statements of income and of changes in shareholders’ equity for the interim period of nine months then ended, and notes 1 to 5 thereto. These statements are the responsibility of the Company’s management. Our responsibility is to issue a report on limited review based on our review.
2. We conducted our review in accordance with the International Standard on Auditing issued by the International Federation of Accountant applicable to review engagements. This standard requires that we plan and perform the review to obtain moderate assurance as to whether the financial statements are free of material misstatements. A review is limited primarily to inquires of Company personnel and analytical procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit, and accordingly, we do not express an audit opinion.
3. The aforementioned financial statements have been prepared for the sole purpose of serving as a basis for the valuation of the parent company’s interest in Prosid Investments Inc. using the equity method, and enabling the parent company to prepare its consolidated financial statements. For this reason, neither the statement of sources and uses of funds nor the additional information required by International Accounting Standards issued by the International Accounting Standard Committee is submitted. We therefore consider that the use of this report for any other purpose would be inappropriate.
4. Based on our review, no other matters have come to our attention that cause us to believe that the financial statements of Prosid Investments Inc. at March 31, 2000 are not presented fairly, in all material respects, in accordance with the basis of accounting indicated in Note 2.