What changed in this filing

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Item 3. Legal Proceedings

2025-02-14 compared with 2024-02-14 · 56 added, 48 removed, 81 unchanged (56% of the section changed)

3 unchanged sentences

Additionally, we are involved in the following legal proceedings.

We are involved in certain arbitrations as respondents/counterclaimants, pending before the International Chamber of Commerce with a few customers who, among other things, have failed to perform under their LTAs and in certain instances are seeking to modify or frustrate their contractual commitments to us.

In particular, Aperam South America LTDA, Aperam Sourcing S.C.A., ArcelorMittal Sourcing S.C.A., and ArcelorMittal Brasil S.A.

(collectively, the “Claimants”) initiated a single arbitration proceeding against two of the Company’s subsidiaries in the International Chamber of Commerce in June 2020.

The Claimants argue, among other things, that they should no longer be required to comply with the terms of the LTAs that they signed due to an alleged drop in market prices for graphite electrodes in January 2020.

Alternatively, the Claimants argue that they should not be required to comply with the LTAs that they signed due to alleged market circumstances at the time of execution.

In June 2021, the Claimants filed their statement of claim, seeking approximately $61.0 million plus interest in monetary relief and/or reimbursement in respect of several fixed price LTAs that were executed between such subsidiaries and the Claimants in 2017 and 2018.

On December 16, 2022, the Claimants revised their calculation of alleged damages to approximately $178.9 million including interest, with damages covering the period from the first quarter of 2020 through the end of the third quarter of 2022 and interest covering the period from June 2020 through December 16, 2022.

In March 2023, an International Chamber of Commerce hearing was held before the party-appointed sole arbitrator with the Claimants, the Company, and witnesses in attendance.

On March 31, 2023, the Claimants further revised their calculation of alleged damages to approximately $171.7 million, including interest, for the period covering the first quarter of 2020 through 2022.

In June of 2023, the Claimants again revised their calculation of alleged damages to approximately $188.2 million, including interest, for the period covering the first quarter of 2020 through the first quarter of 2023.

We believe we have valid defenses to these claims.

We intend to vigorously defend them and enforce our rights under the LTAs.

Monterrey, Mexico Suspension of Operations

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On September 23, 2022, inspectors from the State Attorney’s Office for the Secretary of Environment visited GrafTech Mexico’s manufacturing facility to verify the information presented in GrafTech Mexico’s observations and responses submitted on September 22, 2022.

On October 4, 2022, the State Attorney’s Office for the Secretary of Environment granted an extension of the shutdown of the facility until October 7, 2022 and clarified the suspension permitting GrafTech Mexico to perform several activities, including extracting or withdrawing finished or unfinished product.

On October 4, 2022, the State Attorney’s Office for the Secretary of Environment granted an extension of the shutdown of the facility until October 7, 2022

and clarified the suspension permitting GrafTech Mexico to perform several activities, including extracting or withdrawing finished or unfinished product.

On November 17, 2022, the State Attorney’s Office for the Secretary of Environment lifted the suspension notice, subject to the completion of certain agreed-upon activities, including the submission of an environmental impact study with respect to the facility’s operations, allowing the Monterrey facility to resume operations.

Notwithstanding that the suspension notice has been conditionally lifted and that the Monterrey facility has resumed operations, GrafTech Mexico believes it is prudent to continue to pursue the related legal proceeding set forth below.

Notwithstanding the suspension notice having been conditionally lifted and the Monterrey facility having resumed operations, GrafTech Mexico believes it is prudent to continue to pursue the related legal proceeding set forth below.

Administrative Proceeding

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GrafTech Mexico submitted its environmental impact authorization and risk study for the full site on November 25, 2022, and filed its response to the summons on December 2, 2022.

Once the State Attorney’s Office for the Secretary of Environment initiates the summary argument period, GrafTech Mexico will have three business days to provide its summary arguments.

A final resolution is expected to be issued within fifteen business days from submission of the summary arguments, but can be extended up to an additional three months and is subject to appeal.

On August 29, 2024, the State Attorney’s Office for the Secretary of Environment initiated the summary argument period providing GrafTech Mexico the opportunity to draft final arguments.

GrafTech Mexico was notified of such initiation on September 5, 2024.

GrafTech Mexico submitted its final summary arguments on September 10, 2024.

On October 3, 2024, the State Attorney’s Office for the Secretary of Environment imposed a fine in the amount of approximately $37,152, using an exchange rate of 1 Mexican peso equals 0.051 United States dollars, for failure to have an environmental impact authorization at the time of the inspection that gave rise to the administrative proceeding.

On November 5, 2024, GrafTech Mexico paid the fine under protest stating that an environmental impact authorization was not required because GrafTech Mexico began operations in 1960, such requirement to obtain an environmental impact authorization was introduced in the regulations in 1989, and requiring GrafTech Mexico to obtain an environmental impact authorization for all of its facilities, including those that have been operating since 1960, would constitute a retroactive application of such legislation.

Brazil Clause IV

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(“GrafTech Commercial Mexico”) for the period of January 1 to April 30, 2019.

In September 2021, the MTA issued a tax assessment, claiming improper use of a certain VAT exemption rule for purchases from a foreign

In September 2021, the MTA issued a tax assessment, claiming improper use of a certain VAT exemption rule for purchases from a foreign affiliate.

As of December 31, 2024, the tax assessment for the four month period under audit amounted to approximately $26.1 million, including penalties, inflation and interest.

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At the court’s request, GrafTech Commercial Mexico submitted formal pleadings on August 1, 2023.

On January 8, 2024, the court ruled in GrafTech Commercial Mexico’s favor and annulled the tax assessment.

On January 8, 2024, the court ruled in GrafTech

Commercial Mexico’s favor and annulled the tax assessment.

On January 31, 2024, the MTA filed an appeal for review.

On March 15, 2024, GrafTech Commercial Mexico filed the Tax Adhesive Appeal for Review before the Collegiate Court in Administrative Matters who has authority to hear the MTA’s appeal.

The MTA’s appeal and the Adhesive appeal are still pending to be resolved.

In March 2022, the MTA opened another audit of the VAT filings of GrafTech Commercial Mexico for the period January 1 to December 31, 2018.

In the proposed assessment received in January 2023, the MTA is alleging the same improper use of certain VAT exemption rules on purchases from a foreign affiliate and has provided notice of its intent to assess approximately $51.0 million, including penalties, inflation and interest.

Interest would continue to accrue up to five years from the date the corresponding VAT returns were filed and inflation would continue to accrue with the passage of time.

In Mexico, each tax assessment requires a separate claim.

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On January 24, 2024, the MTA filed its response.

On that same day, GrafTech Commerical Mexico submitted before PRODECON the favorable ruling it obtained on January 8, 2024 in connection with the 2019 preceding for the MTA’s consideration.

On that same day, GrafTech Commercial Mexico submitted before PRODECON the favorable ruling it obtained on January 8, 2024 in connection with the 2019 proceeding for the MTA’s consideration.

On February 1, 2024, the MTA confirmed its position, holding that GrafTech Commercial Mexico was required to withhold the VAT.

GrafTech Commercial Mexico plans to challenge the assessment.

The $51.0 million includes interest and inflation.

Interest will continue to accrue up to five years from the date the corresponding VAT returns were filed and inflation will continue to accrue with the passage of time.

As evidenced by the favorable court decision issued on January 8, 2024, GrafTech Commercial Mexico’s application of the VAT exemption rules is appropriate and, accordingly, GrafTech Commercial Mexico does not believe that it is probable that it will incur a loss related to this matter for either of the two periods under the MTA's audit.

The Company intends to vigorously defend its position in these proceedings.

On March 20, 2024, a meeting was held at PRODECON where the parties confirmed their final positions.

No agreement between the parties was reached, the conclusive agreement procedure came to an end, and the tax audit process resumed.

On July 10, 2024, the MTA concluded the tax audit and determined that there is no tax deficiency to be assessed for the period January 1, 2018 to December 31, 2018.

As evidenced by the favorable court decision issued on January 8, 2024 with respect to the 2019 proceeding and the MTA’s conclusion of the tax audit for the 2018 proceeding, GrafTech Commercial Mexico’s application of the VAT exemption rules is appropriate and, accordingly, GrafTech Commercial Mexico does not believe that it is probable that it will incur a loss related to this matter for the 2019 proceeding under the MTA’s audit.

The Company intends to vigorously defend its position in the 2019 proceeding.

Stockholder Class Action

On January 25, 2024, a stockholder of the Company filed a class action complaint on behalf of all purchasers of GrafTech common stock between February 8, 2019 and August 3, 2023 in the United States District Court of the Northern District of Ohio.

The complaint names the Company, certain past and present executive officers, and two entities associated with Brookfield as defendants.

The complaint alleges that certain public filings and statements made by the Company contained material misrepresentations or omissions relating to the circumstances before and after the prior temporary suspension of the Company’s graphite electrode facility located in Monterrey, Mexico, in September 2022.

The plaintiff seeks compensatory damages, which are unquantified at this time, costs and expenses, and unspecified equitable or injunctive relief.

We believe we have valid defenses to these claims and we intend to vigorously defend them.

On January 25, 2024, a stockholder of the Company filed a class action complaint on behalf of a putative class consisting of purchasers of GrafTech common stock between February 8, 2019 and August 3, 2023 in the United States District Court for the Northern District of Ohio.

The complaint, as amended, names the Company, certain past and present executive officers, and three entities associated with Brookfield as defendants.

The complaint alleges that certain public filings and statements made by the Company contained material misrepresentations or omissions relating to the circumstances before and after the prior temporary suspension of the Company’s graphite electrode manufacturing facility located in Monterrey, Mexico, in September 2022.

The complaint seeks unspecified compensatory damages, costs and expenses, and unspecified equitable or injunctive relief.

On May 15, 2024, the Court appointed the University of Puerto Rico Retirement System as the lead plaintiff.

On October 7, 2024, the plaintiff filed an amended complaint.

On December 6, 2024, the Company filed a motion to dismiss the complaint.

At this stage of the proceedings, it is too early to determine if the matter would reasonably be expected to have a material adverse effect on our financial condition.

Mine Safety Disclosures

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Name Age Position

Flanagan 46 Interim Chief Executive Officer and President

Catherine Hedoux-Delgado 59 Interim Chief Financial Officer and Treasurer

Flanagan 47 Chief Executive Officer and President

Rory O’Donnell 47 Chief Financial Officer and Senior Vice President

Halford 52 Executive Vice President, Chief Operating Officer

Gunning 57 Chief Legal Officer and Corporate Secretary

Renacci 37 Interim Chief Legal Officer and Corporate Secretary

Iñigo Perez Ortiz 53 Senior Vice President, Commercial and CTS

Flanagan became Interim Chief Executive Officer and President in November 2023.

Flanagan joined the Company as Chief Financial Officer, Senior Vice President of Finance and Treasurer in November 2021.

Flanagan became Chief Executive Officer and President in March 2024.

Flanagan had previously served as the Company’s Interim Chief Executive Officer and President since November 2023.

He joined the Company as Chief Financial Officer, Senior Vice President of Finance and Treasurer in November 2021.

Flanagan previously served as Executive Vice President, Chief Financial Officer of Cleveland-Cliffs Inc.

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Flanagan served as Chief Financial Officer of Benesch, Friedlander, Coplan & Aronoff LLP, an AmLaw 200 law firm, from June 2019 to November 2021.

He has a B.S.

in Accounting from the University of Dayton.

Catherine Hedoux-Delgado became Interim Chief Financial Officer and Treasurer in November 2023.

Hedoux-Delgado joined the Company as Vice President, Corporate Controller in April 2012 where she was responsible for the accounting and financial reporting of the Company.

Prior to joining the Company, she spent 20 years at Lexmark International Inc., a multinational printing product and services company, where she most recently served as Director of SEC Reporting and Corporate Consolidation.

Prior to that, she held numerous finance and accounting leadership roles at Lexmark, including Corporate Director of Internal Controls, Finance Director of the Consumer Printing Division for EMEA (Europe, Middle East and Africa) and Finance Director of Lexmark Canada.

Hedoux-Delgado holds a B.S.

in Management from the ESCP Business School in France.

He has a Bachelor of Science degree in Accounting from the University of Dayton.

Rory O’Donnell became Chief Financial Officer and Senior Vice President in September 2024.

O’Donnell previously served as Senior Vice President, Controller and Principal Accounting Officer of Covia Corporation, a provider of mineral-based and material solutions for the industrial and energy markets, since February 2019.

While at Covia Corporation, he also served as Interim Chief Financial Officer from August 2022 to July 2023.

At Covia Corporation, Mr.

O’Donnell was responsible for internal and external financial reporting and compliance, tax planning and compliance, and managing working capital, among other responsibilities.

Prior to Covia Corporation, Mr.

O’Donnell served as Senior Vice President, Controller at Signet Jewelers Limited (NYSE:

SIG), a retailer of diamond jewelry, from 2014 to 2019.

Before joining Signet Jewelers Limited, Mr.

O’Donnell served as Director, Accounting & Reporting at Cleveland-Cliffs Inc.

CLF), a North America-based steel producer.

O’Donnell began his career at KPMG LLP, a professional services firm.

O’Donnell has a Bachelor of Science degree in Accounting from the University of Dayton and is a Certified Public Accountant licensed in Ohio.

Halford became Executive Vice President, Chief Operating Officer in October 2021.

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Halford previously served as the President of Arconic Engineered Structures, a producer of highly engineered titanium and aluminum components for the aerospace, defense and oil and gas markets, a position he held since January 2017.

Halford also was President of Doncasters Aerospace, a manufacturer of components and assemblies for the civil and military aero engine and airframe markets, from 2014 to 2016, and Vice President, Global Business Development, Doncasters Group Limited from 2013 to 2014.

Halford also was President of Doncasters Aerospace, a m anufacturer of components and assemblies for the civil and military aero engine and airframe markets, from 2014 to 2016, and Vice President, Global Business Development, Doncasters Group Limited from 2013 to 2014.

Previously, he also was President of Mayfran International from 2012 to 2013, and spent seven years at Alcoa Corporation (NYSE:

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Halford holds a Master of Business Administration degree from Harvard University and a Bachelor of Science degree in Mechanical Engineering from GMI Engineering and Management Institute (now Kettering University).

Gunning joined the Company as Chief Legal Officer and Corporate Secretary in July 2018.

She has more than 25 years of law firm and in-house corporate legal experience across multiple industries.

Prior to joining GrafTech, she was an Associate General Counsel at FirstEnergy Corp., a distributor and generator of electricity, from 2012 to 2018, where she was responsible for legal matters involving SEC reporting, business development, and capital markets, as well as corporate and executive compensation topics.

She also served as a partner at Jones Day.

Gunning holds a Juris Doctor from Notre Dame Law School and a Bachelor of Arts in English from the University of Notre Dame.

Renacci was appointed Interim Chief Legal Officer and Corporate Secretary in January 2025.

Prior to that, Mr.

Renacci served as GrafTech’s Senior Corporate Counsel from April 2021 to January 2025, where he was responsible for advising GrafTech in matters related to corporate governance, executive compensation, capital markets, ESG, securities laws, stock exchange rules and regulations, periodic reporting responsibilities and strategic transactions.

Prior to joining GrafTech, Mr.

Renacci spent approximately nine years in the corporate and securities group at Squire Patton Boggs (US) LLP, an international law firm, where he advised clients in the chemicals, manufacturing and entertainment and recreation industries on similar matters.

Renacci holds a bachelor’s degree from the University of Michigan and a Juris Doctor from Cleveland State University College of Law.

He is admitted to practice law in the State of Ohio.

Iñigo Perez Ortiz joined the Company as Senior Vice President, Commercial and CTS in February 2020.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 3. Legal Proceedings