17 de febrero de 2016 / 23:20 / en 2 años

UPDATE 1-Board of Brazil's Usiminas declines to discuss capital, debt issues, sources say

(Recasts to add details, share performance, background throughout)

By Guillermo Parra-Bernal and Tatiana Bautzer

SAO PAULO, Feb 17 (Reuters) - Usinas Siderúrgicas de Minas Gerais SA’s board on Wednesday declined to discuss a capital injection and a refinancing deal with banks to help the struggling steelmaker but will consider the proposals on March 3, two sources with direct knowledge of the matter said.

Controlling shareholders Nippon Steel & Sumitomo Metal Corp and Techint Group, which have remained at loggerheads for control of the steelmaker known as Usiminas since late 2014, decided to postpone discussion of those issues to allow for further analysis, said the sources, who requested anonymity because of the sensitivity of the issue.

Shares of Belo Horizonte, Brazil-based Usiminas gained 15 percent this week on speculation that both shareholders would agree on a joint turnaround plan, paving the way for banks to refinance over 4 billion reais ($1 billion) in loans maturing within the next two years.

At stake is the survival of Usiminas, which was founded 53 years ago to help supply flat steel products for Brazil’s thriving auto-making and home appliances industries located in the state of Minas Gerais and neighboring regions in Brazil’s Southeast. The company is struggling with Brazil’s deepest recession in decades and the impact of the shareholder dispute.

Reuters reported last week that Usiminas is in talks with four major banks to refinance those loans. Sources said that Itaú Unibanco Holding SA, Banco Bradesco SA, Banco Santander Brasil SA and Banco do Brasil SA demand the company be capitalized prior to any debt relief plan.

According to both sources, representatives of Nippon Steel in the board asked fellow members not to discuss a proposal requiring banks to accept a so-called 180-day standstill agreement, saying it could hamper the position of another creditor, the Japan Bank for International Cooperation.

In turn, Italy’s Techint asked that a Nippon Steel-backed plan to inject fresh capital into Usiminas be kept out of the meeting, the same sources added. Representatives for Techint allege that no money can be pumped into the company unless Nippon Steel agrees to rebuild the shareholder accord that was broken when both clashed.

RIFT

Techint and Nippon Steel did not have an immediate comment. Usiminas declined to comment.

Non-voting shares of Usiminas advanced 6.4 percent to 1 real on Wednesday, their highest level in almost two weeks. The stock is down 73 percent in the past 12 months.

After two years of Techint-led management of Usiminas, in which the company reversed losses, cut debt, bolstered cash and increased productivity at its two main plants, Nippon Steel broke off with the Italian-Argentine group in September 2014, accusing some of its executives of mismanaging Usiminas.

Nippon Steel then allied with Brazilian billionaire investor Lírio Parisotto and other Usiminas shareholders to appoint new management and push Techint aside from day-to-day operations. The spat coincided with the deepening of a slump in Brazil’s demand for cars and home appliances made with Usiminas steel.

In recent months, the Nippon Steel-backed management decided to shut down the Cubatão mill and is poised to fire as many as 1,800 staff. The measures, which could alleviate Usiminas’ rigid cost structure in future, could put additional pressure on cash in the short term, Fitch Ratings said last month.

Usiminas plans to unveil fourth-quarter results early on Thursday, and analysts in a Reuters poll expect the company to post a net loss larger than other listed rivals in the country and, unlike them, negative earnings before interest, tax, depreciation and amortization.

$1 = 3.9821 Brazilian reais Additional reporting by Alberto Alerigi Jr; Editing by Lisa Shumaker

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