19 de agosto de 2015 / 16:38 / en 2 años

Brazil's CSN mulls Rothschild or Lazard for asset sales-source

SAO PAULO, Aug 19 (Reuters) - Cia Siderúrgica Nacional SA , the debt-laden Brazilian steelmaker, is likely to decide between global advisory firms Rothschild and Lazard Ltd to coordinate the sale of some non-essential assets, a source with knowledge of the situation said on Wednesday.

According to the source, who requested anonymity since the plan remains private, CSN Chief Executive Benjamin Steinbruch is more inclined towards hiring a global independent advisor than a local one for the job, because of the former’s perceived greater ability to lure international bidders.

By hiring an independent firm, Steinbruch is seeking to mitigate any potential conflicts of interest with banks that act as both lenders and advisors to the steelmaker, the source added. Those creditors, however, could participate in the process by handling some specific mandates, the source added.

Assets that could be sold include cement assets and part of CSN’s stake in iron ore mining venture Congonhas Minérios SA, according to another source briefed on the plans. Both sources said CSN’s logistics assets may draw scant interest from potential bidders.

Rothschild has topped mergers and acquisitions advisory in Brazil so far this year, having worked on nine deals worth $9.8 billion. The firm declined to comment. Messages left for press representatives at Lazard in New York and CSN in São Paulo were not immediately answered.

Steinbruch’s decision to sell some of the non-core assets that CSN amassed in recent years is a blow to his wish to expand abroad and in areas other than steel and mining. The heir to a textile empire, Steinbruch turned CSN into Brazil’s largest diversified steel group, with interests in mining, logistics, cement and steelmaking, since buying what was then a failing mill from the Brazilian government in 1994.

CSN’s debt burden risks becoming unsustainable within a short period of time unless it sells off assets, both sources said. Steelmakers in Latin America’s largest economy are struggling with sinking domestic demand and, in particular, delays in Brazilian infrastructure projects as the economy slips into its steepest recession in a quarter century.


Last week, Steinbruch told analysts in a conference call that CSN is focused on downsizing and preserving cash in an effort to cut debt. On Aug. 13, Brazil’s No. 2 maker of flat steel posted a quarterly loss that dragged shares to their lowest level in over a decade.

“We have accumulated excellent assets over time, but with changes in the cost of capital, the fall in iron-ore prices, the decline in the domestic market, we are working to return our focus to our core business,” he said.

Analysts have been closely watching CSN’s ability to stay current on 20.8 billion reais ($6 billion) of debt, a substantial chunk of which is denominated in dollars, in the wake of a slumping currency and iron ore prices. Last quarter, debt excluding cash holdings reached 5.6 times accumulated earnings before interest, tax, depreciation and amortization, more than twice the 2.7 times ratio a year earlier.

CSN’s 7 percent perpetual bond was trading at 55 cents on the dollar on Wednesday, down from 74 cents since the start of this year, according to Thomson Reuters composite prices.

American depositary receipts of the São Paulo-based company have shed 56 percent so far this year, and traded at $0.8665 on Wednesday in New York.

$1 = 3.5030 Brazilian reais Editing by Christian Plumb

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