INDEX

1. History

2. Structure of OIAG

3. Organisation of OIAG

4. Privatization

10 Shareholder 5 Employee 4 Experts for privatisationrepresentatives representatives

Appointed by:

Ministry of Finance Federal chamber 2 by Federal chamber of labor (Bundes- of labor

arbeiterkammer) 2 by Federal chamber of commerce

1 direct representative of the Ministry of economy affairs

1 direct representative of the Ministry of Finance

Supervisory board members with voting right Advisor; no voting right

Supervisory Board of ÖIAG:

Supervisory board Minimum 3 members Appoints, removes and (Aufsichtsrat) (Chairman, Vice chairman) supervises the Management

board, but is normally not entitled to give directions

Management board 1 or several members Responsible for day-to-(Vorstand) day management and

corporate policy

Shareholders general elects Supervisory board meeting members(Hauptversammlung)

At ÖIAG the general shareholders meeting consists of the Republic of Austria represented by the Ministry of Finance.

The Austrian joint stock corporation (Aktiengesellschaft):

adopts Memorandum and Articles elects and removes Supervisory board members (except for employee

representatives) decides increase or reduction of capital and eventual disapplication of

shareholders pre-emption rights in the issue of new shares discharges Supervisory board appoints auditors decides profit distribution decides dissolution of the company, merger into another corporation and

fundamental change of business

Shareholders general meeting:

Supervisory Board:

size according to capital of the corporation supervises the Management board has the right to request reports by the Management board and to inspect the

accounts and assets of the corporation appoints and removes the Management board diligent discharge of responsibilities towards shareholders 1/3 of the members employee representatives

Management board has to seek the Supervisory board´s consent for major transactions, such as - acquisitions and sale of companies or interests therein, acquisition and sale or closure of companies or plants;- acquisition, sale and mortgaging of real estate;- establishment and closure of subsidiaries;- investments above certain limits;- taking or granting of loans above a certain amount to be specified by the Articles of Association;- opening or closure of business or production units;- setting of general principles of business policy;- setting of principles for profit or turn-over related renumeration and pension grants to leading employees; - grant of a power of procuration

Additionally, the Articles may provide that the Supervisory board´s consent is also necessary for other matters.

Supervisory Board:

DECISION FLOW

Parliament

ÖIAG

OMV, VA Stahl etc

Company(Subsidiary)

Stock company

Stock company

Limited liability comp.

Appoints the Supervisory Board

Reports

Presides inSupervisoryBoard

Minister

Organisation and administration for the nationalized industry

Organisation Political responsibility

1946-59 Ministry for transport and public economy

1959-66 Chancellery

1966-67 Ministry for transport and public economy

1967-70 Limited comp. "Österr. Ministry for transport Industrieverwaltungs and public economy GmbH (ÖIG)" as trustee for the Republic of Austria

Organisation and administration for the state-owned industryOrganisation Political responsibility

1970-86 OIAG (Austrian Industries Federal chancelleryHolding Comp.): joint stockcompany; speciality: super-visory board reflects socio-political landscape of Austria

1986-93 politically indipendent Ministry for transport and supervisory board members public economy

1993 New OIAG-law changes task Ministry for transport and of OIAG: OIAG shall no longer public economy form an industrial conern, butshall privatise the majority of its companies. OIAG shall remain minority shareholder of the most important industrial companies of Austria.

History of the state-owned industry

1946: First Nationalisation Law: approved by all parties inparliament (conservative people party, socialist party,

communist party)

1950-1970: Period of economic boom:

high level of demand

high production level

high capital expenditure

full employment

increasing wages

high social benefits (f.i.: company pension schemes etc.)

History of the state-owned industry

1970-1985: economic decline

increasing competition

worldwide recession (oil price shock 1973, 1975)

political influence on nationalised companies to maintain employment level by diversifiing into new production areas

merger of carbon & special steel firms (VOEST & ALPINE)

economic problems of Voest-Alpine because of losses in the new production areas

History of state-owned industry

1985-1987:

government changes management of Voest and ÖIAG, big enterprises are split into legally iandependent market oriented companies

parliament approves a large capital injection, imposing that it will be for the last time and that further new capital could only be raised by privatisations

Restructuring of Voest-Alpine:

- decentralisation: devisions are split into legally indipendent business units

History of the state-owned industry

1987-1989: Reorganisation and Consolidation period

1990-1992:

general economic upswing

Austrian Industries group issues convertible bonds, intending to convert them into shares within 5 years

Internationalisation of the group by an aggressive acquisition policy

1993:

recession: lowest steel-price of the cycle, lowest aluminium prices since the 1950ies

aluminium group of Austrian Industries is nearly bankrupt due to the worldwide aluminium crisis and too expensive acquisitions; OIAG as the mother Company of Austrian Industries can no longer carry its debt burden and has to be helped by the state.

government passes a new law: OIAG gets a subordinated loan, repayable after repayment of bank loans. All liabilities have to be paid back by privatisation revenues.- ÖIAG shall privatise all its companies in due time. The companies and the extent to which they shall be privatised are determined in the law.- Austrian Industries has to be merged with ÖIAG.

ÖIAG shall no longer form a conern.

History of the state-owned industry

Debt Reduction

Ⅰ) OIAG Net Debt as of

31.12.93

% Privatisation proceeds

ÖIAG Net Debt as of 31.12.99

bn ATS bn Euro

22,2

-22,8

0

Ⅱ) Additional ÖIAG Privatisation Proceeds 8,1

Ⅲ) PTBG Debt as of 31.12.1996

Privatisation Proceeds minus interest

PTBG Debt as of 31.12.1999

50,0

21,0

29,0

Ⅳ) Old ÖIAG Debt to be payed back by further

privatisation proceeds46,2

1,61

- 1,66

0,59

3,63

1,53

2,11

3,36

0