UPDATE 5-Brazil's Usiminas slumps as turnaround plan remains uncertain

jueves 18 de febrero de 2016 18:22 GYT

(Adds comments about Nippon position on Techint stake)

By Guillermo Parra-Bernal and Alberto Alerigi Jr

SAO PAULO Feb 18 (Reuters) - The stock of Usinas Siderúrgicas de Minas Gerais SA slumped on Thursday after shareholders failed to agree on a plan to help the money-losing Brazilian steelmaker weather a slumping domestic economy and alleviate its swelling debt burden.

On a call to discuss fourth-quarter results, executives said controlling shareholders Nippon Steel & Sumitomo Metal Corp and Techint Group, an Italian-Argentine conglomerate, are studying steps to help Usiminas.

However, sources told Reuters that the companies refused to discuss the issues at a Wednesday board meeting, leaving a decision for March 3.

Nippon Steel and Techint agree that Usiminas needs fresh capital to weather the worst crisis for Brazil's steel sector in years, Chief Financial Officer Ronald Seckelmann said on the call. Measures under analysis include a capital injection, loans from both shareholders or a subsidiary, and a debt refinancing deal, he said, without elaborating.

A source with direct knowledge of the issue said later in the day that Nippon was open to potentially buying Techint out of its stake in Usiminas. Moreover, Nippon wants to see only the smallest capital increase possible for Usiminas.

Non-voting shares fell as much as 11 percent to 0.89 reais, the steepest intraday drop in over two weeks. The stock had gained 15 percent in the three days prior to the release of quarterly results, on hopes that Nippon Steel and Techint would agree on a joint turnaround plan.

Investors worry that Usiminas, Brazil's No. 1 listed flat steel producer and based in Belo Horizonte, will take too long to deal with both the recession and the shareholder dispute. The company posted a bigger-than-expected fourth-quarter loss after management had to cut the value of assets to account for the closure of a mill, worker dismissals and halted projects.   Continuación...