(Adds debt data, comments throughout)
By Guillermo Parra-Bernal and Alberto Alerigi Jr
SAO PAULO, June 15 (Reuters) - Usinas Siderúrgicas de Minas Gerais SA agreed with banks and local bondholders to refinance about 5.4 billion reais ($1.6 billion) in loans and local notes, boosting efforts by Brazil’s largest listed flat steelmaker to overcome a deep crisis.
In a Wednesday securities filing, Belo Horizonte-based Usiminas said banks agreed to extend maturities over the next 10 years with a three-year grace period on the principal. A spokesman for the company declined to detail additional terms of the new arrangement, saying the accord is under banking secrecy.
Creditors including Banco do Brasil SA, Banco Bradesco SA, Itaú Unibanco Holding SA and state development bank BNDES signed binding refinancing accords as part of the deal. The refinancing, equivalent to 75 percent of the company’s debt, hinges on full approval of a recent capital injection of 1 billion reais, the filing added.
Reuters had reported in February that banks and Usiminas were discussing terms of a refinancing of about 4 billion reais in loans. The lender had obtained a 120-day standstill accord with creditors on March 22.
Nonvoting shares surged 14 percent to 1.91 reais on Wednesday, their biggest intraday gain since Aug. 4, on optimism the refinancing will buy the company time to return to profitability in Brazil’s harshest recession in eight decades. The stock is up 24 percent this year.
“The probability of financial distress is now materially reduced after the recent developments at Usiminas,” said Leonardo Correa, an analyst with Banco BTG Pactual.
According to a source with knowledge of the agreement with banks, interest on loans with Itaú, Banco do Brasil, BNDES and Bradesco was “adjusted,” without giving any details. The source, who requested anonymity because the deal is confidential, said the accord entails no losses for creditors.
At stake is the survival of Usiminas, which was founded 53 years ago to help supply flat steel for Brazil’s thriving auto-making and home appliances industries located in the state of Minas Gerais and neighboring regions in the country’s Southeast.
Apart from a tempestuous boardroom battle between controlling shareholders Techint Group and Nippon Steel & Sumitomo Metal Corp, Usiminas has struggled with rising steel imports and two years of economic contraction in Brazil.
Gross debt was 7.4 billion reais at the end of March, up 4 percent from a year earlier. Usiminas has 1.7 billion reais in cash, down 37 percent in the same period.
Terms on an additional 1.7 billion reais worth of foreign-denominated debt will be negotiated, the spokesman at the company said, adding that talks are expected to end next month.
$1 = 3.4660 Brazilian reais Additional reporting by Brad Haynes and Ana Mano in São Paulo; Editing by Chizu Nomiyama and W Simon