Fitch Ratings Places Tenaris' 'A-' IDR on Rating Watch Negative.

CHICAGO -- Fitch has placed the 'A-' Issuer Default Rating (IDR) of Tenaris S.A. (Tenaris) on Rating Watch Negative. The rating action follows the recent announcement that Tenaris has entered into a definitive merger agreement to acquire Hydril Company (Hydril) in cash for approximately US$2.1 billion. Hydril is a North American manufacturer of premium connections and other products for oil and gas drilling and production. The agreement is subject to approval by U.S. antitrust authorities and majority approval by Hydril's shareholders.

Tenaris intends to fund the acquisition of Hydril with cash and US$1.5 billion of additional debt. Tenaris also assumed US$2.7 billion of debt in the last quarter of 2006 for the US$3.2 billion acquisition of Maverick Tube Corporation (Maverick), a North American producer of welded steel pipes for the oil and gas industry. Further rating actions will be taken by Fitch after reviewing debt management strategies.

Strategically, Fitch views the acquisition of Hydril as positive as it will enhance the geographical diversification of Tenaris' sales revenues. The Maverick acquisition provided an opportunity to enter a market that has generally been limited to Tenaris due to anti-dumping restrictions in the United States.

Tenaris' benefits from its solid competitive position as a leading low-cost producer of seamless and welded steel pipes for oil and gas drilling, and should continue to benefit from the favorable near-term outlook for the oil and gas industry. In the first nine months of 2006, the company generated EBITDA of US$2.2 billion, an increase of about 47% over the same period in 2005. At Sept. 30, 2006, Tenaris had total debt of US$875 million and cash of US$1.4 billion. Tenaris began consolidating the results of Maverick in October 2006.

Through operating entities in 10 countries, Tenaris produces seamless and welded steel pipe products, primarily for oil and gas drilling and pipelines but also for the automotive sector and other industrial manufacturing. Seamless steel pipe sales of 2.9 million tons generated about 76% of Tenaris' consolidated revenues of US$6.7 billion in 2005. Seamless pipe sales by volume went to markets in North America (29%), Europe (23%), the Middle East/Africa (18%), South America (15%) and Asia (14%). Techint, Tenaris' controlling shareholder, owns a 60% stake in the company and operates worldwide in the steel, energy, engineering and construction sectors. Tenaris was incorporated in Luxembourg in 2001 to hold the group's steel tube manufacturing and distribution businesses.

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