(Recasts with additional sources, comments, details)
By Guillermo Parra-Bernal and Alberto Alerigi Jr
SAO PAULO, July 13 (Reuters) - Usinas Siderúrgicas de Minas Gerais SA, Brazil's No. 1 listed flat steelmaker, is asking banks to extend a 120-day standstill agreement covering 4 billion reais ($1.22 billion) in loans that expires next week in a bid to conserve cash, four sources said on Wednesday.
Usiminas has contacted Itaú Unibanco Holding SA, Banco Bradesco SA and state-controlled lenders Banco do Brasil SA and BNDES to stretch out the standstill deadline by between 30 days and 60 days, said the sources, who asked for anonymity to speak about the matter.
"Terms of the definitive contracts have yet to be negotiated," said one of the sources. "The initial 120-day period was a tentative one ... normally, a little more time is required to iron out issues such as guarantees and documentation."
On June 15, the banks agreed to stretch out Usiminas maturities over the next 10 years with a three-year grace period on the principal. The refinancing, equivalent to 75 percent of the company's debt, is contingent on full approval of a capital injection led by controlling shareholders Techint Group and Nippon Steel & Sumitomo Metal Corp.
Usiminas, Banco do Brasil and Bradesco declined to comment. Itaú and BNDES did not have an immediate comment. Reuters first reported in February that banks and Usiminas were discussing terms of a loan refinancing.
Common shares of Usiminas shed 1.4 percent to 7 reais, while preferred shares added 0.9 percent to 2.15 reais on Wednesday.
At stake is the survival of Usiminas, which was founded 53 years ago to help supply flat steel for Brazil's thriving auto-making and home appliances industries located in the state of Minas Gerais and neighboring regions in the country's Southeast.
Apart from a tempestuous boardroom battle between Techint and Nippon Steel, Usiminas has struggled with rising steel imports and two years of economic contraction in Brazil.
Gross debt was 7.4 billion reais at the end of March, up 4 percent from a year earlier. Usiminas has 1.7 billion reais in cash, down 37 percent in the same period.
Terms on an additional 1.7 billion reais worth of foreign-denominated debt are being negotiated, the company said in June.
($1 = 3.2890 Brazilian reais)
Reporting by Guillermo Parra-Bernal; Additional reporting by Alberto Alerigi Jr in São Paulo; Editing by Sandra Maler and Tom Brown