Venezuelan steel maker to challenge state takeover

Venezuela's largest privately owned steel producer vowed Monday to challenge President Hugo Chavez's order to expropriate its assets, even as soldiers arrived to oversee the takeover.

Sidetur's board of directors issued a statement promising legal action to protect its "employees, clients, suppliers and shareholders."

Chavez ordered the expropriation of Sidetur on Sunday, saying it is part of his strategy to transform Venezuela into a socialist state.

He said the company has been selling products such as rebar at inflated prices on the domestic market, though the company said its prices have been frozen since 2006 despite rampant inflation in the overall economy.

The company statement said that under Venezuelan law, only a judge can order the takeover of a company, and only after payment of an assessed price for the assets.

Sidetur - Siderurgica del Turbio SA - also exports products including steel beams, angles and flats to Latin America, Africa, Asia and Europe.

The company's statement said it sold 350,000 metric tonnes of steel-made products on the domestic markets last year, and that it is "committed to the development of the country."

It suggested that the takeover could damage the government's own infrastructure and construction plans.

Sidetur also said its 1,857 workers "will be affected, along with their families, by the expropriation measure."

The company is a subsidiary of Siderurgica de Venezuela SA.

Chavez ordered the National Guard to safeguard the company's plants as his government proceeds with the expropria-tion and he urged the company's employees to cooperate with govern-ment officials rather than protest the takeover.

Soldiers were posted on Monday at the entrance to a storage facility in Caracas where Sidetur stockpiles scrap metal. Dozens of workers were outside, protesting the planned takeover. One group of men held up a banner reading: "Expropriation equals more unemployment." A smaller group of Chavez backers demonstrated nearby to support for the takeover.

Chavez has ordered the expropriation of dozens of privately owned companies since taking office in 1999. Last week, Chavez ordered the expropriation of US-based glass container manufacturer Owens-Illinois Inc.'s subsidiary in the South American country.

-AP