SAO PAULO, Oct 1 (Reuters) - Matalúrgica Gerdau SA, the investment holding company that controls Brazilian steelmaking group Gerdau SA, is considering raising about 1.5 billion reais ($380 million) in a private stock offering to repay debt, Valor Econômico newspaper said on Thursday.
According to Valor, which cited unidentified market sources, Metalúrgica Gerdau is planning to launch a so-called restricted-effort offering in which a yet to determine amount of new stock will be put up for sale among existing shareholders and a limited number of outside investors.
Public offerings with restricted efforts differ from standard equity offerings in that a company does not have to request registration of the plan with securities industry watchdog CVM, only qualified investors can participate, and the deals cannot be marketed through road shows or the media.
Proceeds from the offering would be used to repay debt that Metalúrgica Gerdau owes to Grupo BTG Pactual SA, the largest independent investment bank in the country, Valor said. The Gerdau Johannpeter family, which controls Metalúrgica, could subscribe around two-thirds of the offering, with BTG Pactual also taking part in it as an underwriter, the paper reported.
The bank could help prop up the offering by buying shares, Valor said, without specifying how.
Porto Alegre, Brazil-based Gerdau did not have an immediate comment. BTG Pactual did not comment on the Valor report.
Shares of Metalúrgica Gerdau are down 74 percent this year, in line with other steel shares that are being hammered by the impact of slowing growth in China, declining iron ore and steel prices and Brazil’s worst recession in a quarter century. Brazilian steelmakers are also reeling with a high debt burden, which has grown substantially as the real shed about one-third of its value against the U.S. dollar this year.
$1 = 3.9494 Brazilian reais Reporting by Guillermo Parra-Bernal Editing by W Simon