12 de noviembre de 2015 / 16:33 / en 2 años

UPDATE 1-Usiminas must downsize to weather Brazil recession -CEO

(Adds quotes from Usiminas executives, details)

By Walter Brandimarte

SAO PAULO, Nov 12 (Reuters) - Brazilian steelmaker Usiminas must downsize operations, sell assets and refinance outstanding bank loans to cope with a deep economic recession at home and falling prices for steel products abroad, Chief Executive Officer Rômel de Souza said on Thursday.

Demand for flat steel products has plunged by more than 25 percent on an annual basis as Brazil slumped into its deepest recession in a quarter century, Souza noted during a presentation to analysts in Sao Paulo.

At the same time, export margins have been squeezed markedly as flat steel prices dropped faster than those for raw materials such as iron ore and coal, he said.

“We are losing competitiveness,” Souza said. “It gets harder by the day. We have no option but to downsize.”

The company has been wrestling with weak demand and high debt, as well as a bitter boardroom battle between its two main shareholders. Usiminas is not considering raising additional capital at the moment, Chief Financial Officer Ronald Seckelmann said during the same presentation.

“That would be a last-resort measure, and it isn’t on the table yet,” he said.

Usinas Siderúrgicas de Minas Gerais SA, as Brazil’s largest producer of flat steel is formally known, has halted operations in its Cubatao plant near Sao Paulo after realizing that reducing output to a minimum was not enough.

Employees at the plant have gone on strike against Usiminas’ plans but Souza said the company has no option but to lay off about 4,000 workers in Cubatao as of January.

Usiminas is also seeking to raise cash by selling non-core assets such as Usiminas Mecanica SA, a manufacturer of structural steel products.

The company has just started negotiations with banks to refinance its debt, Souza said, without elaborating on the plan as talks are preliminary.

Usiminas main creditors are Brazil’s private-sector banks Banco Bradesco SA and Itaú Unibanco Holding SA , as well as state-owned Banco do Brasil SA , state development bank BNDES and the Japan Bank for International Cooperation.

Usiminas shares rose 0.4 percent on Thursday to 2.80 reais. The stock is down 44 percent so far this year. (Reporting by Walter Brandimarte; Editing by Guillermo Parra-Bernal and David Gregorio)

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