Exhibit 99.1

NOTICE TO SHAREHOLDERS

PAYMENT OF INTEREST ON CAPITAL STOCK

We would like to inform our Shareholders that the Boards of the companies listed below, in meetings held on May 3rd, 2007, deliberated about the proposals presented by management with regards to the payment of dividends for the first quarter of the current fiscal year, ended on March 31st, 2007. These dividends will be paid as Interest on Capital Stock on May 24th, 2007, calculated and paid based on the position held by shareholders on March 14th and constitute an anticipation of the annual minimum dividend as stated in the by-laws, as follows:

Company	Amount per share Common and Preferred Shares
METALÚRGICA GERDAU S.A.	R$	0.56
GERDAU S.A.	R$	0.34

Please note that a 15% (fifteen percent) deduction will be made as withholding of Income Tax in compliance with Paragraph 2, article 9 of the Brazilian Corporate Law # 9249/95.

Shareholders exempt of Income Tax Withholding must confirm this status by mailing the corresponding documents to the address below no later than May 14th, 2007:

GERDAU – Setor de Acionistas (Shareholders Dept.)

Av. Farrapos, 1811 - Porto Alegre RS CEP 90220-005 - BRAZIL

The Company will consider that the shareholder is not tax-exempt if the above mentioned documents are not received by the aforementioned date.

Please note that shares acquired on May 15th, 2007, and thereafter, will be traded EX-DIVIDEND (INTEREST ON CAPITAL STOCK).

Additional information can be obtained at our Shareholders Department, located at

Av. Farrapos 1811, 90220-005 Porto Alegre / RS – Brazil

Phone: +55 (51) 3323.2211 – Fax: +55 (51) 3323.2281

E-mail acionistas@gerdau.com.br

Porto Alegre, May 3rd, 2007.

Osvaldo Burgos Schirmer

Executive Vice President

Director of Investor Relations