UPDATE 1-Argentine judge blocks Siderar dividend payment

Thu May 5, 2011 5:31pm EDT

* Court ruling blocks payment of 2010 dividend

* Decision upholds market regulator's stance

* Gov't wants greater presence on company boards (Adds company saying it will appeal)

BUENOS AIRES, May 5 (Reuters) - A planned dividend payment by steelmaker Siderar (SID.BA) was blocked by an Argentine judge on Thursday in the latest twist in a row linked to the government's efforts to tighten control over leading companies.

The steel company had planned to pay a 2010 dividend of $359.5 million on Friday despite a ruling last month by the country's stock market regulator that effectively annulled the payment by declaring a shareholders meeting void.

"Siderar is not entitled to pay dividends using funds from ... its 'future dividend reserves,'" Judge Hernan Papa said in the ruling, a copy of which Siderar sent to the Buenos Aires Stock Exchange.

Siderar, which is majority owned by Ternium SA (TX.N), said it will appeal the decision, which marks a victory for the center-left government of President Cristina Fernandez.

The company said in a statement it would take swift legal action to defend its rights.

A dispute erupted between the steelmaker and her administration last month after the company resisted the government's choice to represent the Anses state pensions agency on the company's board of directors.

The Anses holds stakes in 42 companies as a result of Fernandez's 2008 nationalization of private pension funds.

Soon after Siderar rejected the government's nominee to sit on its board, Fernandez signed a decree to scrap a rule limiting the state to holding just 5 percent of voting rights on company boards, even when its stakes were greater.

The Anses holds a 26 percent stake in Siderar, which has challenged the government decree in court.

Shares in Siderar, which is controlled by Argentina's Techint conglomerate and has steel operations in Mexico and Argentina, have been suspended from trading on the Buenos Aires Stock Exchange due to an order by the securities regulator. (Reporting by Walter Bianchi; Writing by Helen Popper, editing by Bernard Orr) (helen.popper@thomsonreuters.com; +54 11 4318 0655; Reuters Messaging: helen.popper.reuters.com@reuters.net))

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