Nippon Steel seeks advisers for split of Brazil's Usiminas, sources say

miércoles 24 de agosto de 2016 12:26 GYT

By Guillermo Parra-Bernal and Alberto Alerigi Jr

SAO PAULO Aug 24 (Reuters) - Nippon Steel and Sumitomo Metal Corp is working on a plan to split Usinas Siderúrgicas de Minas Gerais SA (Usiminas) into two separate units, in a last ditch attempt to end a two-year battle with Techint Group for control of the Brazilian steelmaker, two people familiar with the matter said on Wednesday.

The Japanese mining and steel giant is looking for financial and legal advisers to work on the plan, which has been touted since March, said one of the people, who requested anonymity to speak freely about the issue. The person did not say which firms are competing for the role.

Under terms of the plan, Nippon Steel would get the 5 million-tonne-per-year Ipatinga mill, the first person said. Techint Group, the other controlling shareholder of Usiminas, with which Nippon Steel has been at loggerheads since September 2014, would get the Cubatão mill, which has annual capacity of 4.5 million tonnes, the same person added.

Italy's Techint may discuss a split if the plan forms part of an effort to end the shareholder dispute, the second person said. As an alternative to the asset split, Techint is in favor of adding a clause to their shareholder agreement allowing it or Nippon Steel to exit Usiminas under some conditions, the same person said.

The split plan was backed by Paulo Penido, the former Usiminas chairman close to the Nippon Steel camp who passed away earlier this month, the people said. Yoichi Furuta, Nippon Steel's top Brazil executive, said in July that a split-up of the Ipatinga and Cubatão mills remained an option to resolve the ongoing dispute over Usiminas.

Earlier in the day, Valor Econômico newspaper, citing sources, said both shareholders are near reaching an agreement to divide the company into two parts.

Media representatives for Nippon Steel and Techint declined to comment.

Techint manages the approximately 38 percent stake it owns in Usiminas through its steelmaking unit Ternium SA. Nippon Steel owns about 31 percent of the Brazilian steelmaker.   Continuación...